Freedom Bank Closed $75 million in MSLP Loans and will Participate in PPP 2
Fairfax, VA (January 11, 2021) - The Freedom Bank of Virginia (OTCQX: FDVA) announced today that it closed $75 million in Main Street Program Loans (MSLP) to businesses in the Washington DC region. Freedom is one of the few banks in the country that successfully delivered needed capital to great companies who were then able to reposition and recapitalize to manage through the most challenging days of the COVID-19 pandemic.
The Bank also announced that it will be participating in the new Paycheck Protection Program (PPP) authorized in the most recent economic relief package, which includes an additional $284 billion for the PPP for small businesses in 2021. Freedom Bank played a huge role in the local small business community in 2020 by originating $105 million in PPP loans for over 500 clients, 250 of which were new customers to the Bank. As a percentage of loans, this was over 20% of Freedom’s outstanding loans and double the percentage provided by peer banks.
The Bank is now gearing up for the next round of funding. If you have already received a PPP loan, below are the key details regarding program changes and eligibility for a second PPP loan:
•A second PPP loan will be available for businesses with fewer than 300 employees and that sustained a loss of revenue of 25% relative to the prior year comparable fiscal quarter.
oRestaurants and hotels (NAICS code 72 will be eligible for 3.5x average monthly payroll) and all other business will be eligible for 2.5x.
oLoan size is capped at $2mm and the total of the two loans cannot exceed the initial $10mm cap.
•Expenses paid for with PPP loans will now be considered tax deductible.
•Expenses eligible for forgiveness have been expanded to include the following (if your loan has already been forgiven, you are excluded from this change):
oOperational expenditures: business software, payroll software, HR, billing functions, accounting, tracking of inventory
oProperty damage: vandalism or lootings that is not covered by insurance (during 2020 only)
oSupplier costs: POs, perishable goods, or inventory
oWorker protection: screens, cough guards, or any structure to be in compliance with new health codes from the CDC or DHHS
•PPP Loans under $150,000 will have a one-page forgiveness application.
•501(c)(6) organizations that are not lobbying organizations such as chambers of commerce, trade associations, and boards of trade are now eligible if they have fewer than 150 employees.
If you did not apply for or receive a PPP loan in the first round, you have another opportunity to apply for one now. The program guidelines are largely unchanged, except the maximum loan amount is now $2 million and eligible businesses must have 300 employees or less (excluding NAICS code 72 businesses).
PPP officially reopens today, but only for first-draw laws provided by a community financial institutions (CFI) - community development financial institutions, minority depository institutions, certified development corporations, and microloan intermediaries. Freedom is not a CFI and we think therefore that Freedom Bank will be in a position to submit borrower applications as soon as the end of this week. The SBA has provided updated forms to use for first draws and second draws and has noted that in this round of PPP there will be a time lapse between when the lender submits the PPP application information and when the SBA provides the SBA loan number to the lender.
Freedom Bank will be using a powerful, proven, and completely digital solution into this next round of PPP lending via the Atlas platform provided by Street Shares and Fiserv. The platform is simple, organized, and full of technical resources. Access will be provided by a URL that will be available on the bank’s website. “This is one of the hallmarks of working with Freedom—we utilize our experienced bankers to advise clients personally and leading edge technology to streamline the process. As we demonstrated in the first round of PPP and MSLP, our entire team is committed to small business’ success in securing funds in this vital program for our client’s continued health and success when they most need support from their banking relationship,” said CEO Joe Thomas.
If you are interested in a PPP loan under the renewed program or have any questions about the program, please call us.
Joseph J. Thomas, President & Chief Executive Officer
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