St. Louis nonprofit is swamped with minority-owned small businesses seeking latest PPP funding

Katie ArnoldJP In The News, News

From the St. Louis Businesss Journal.

Beth Bender Speaks with St. Louis Business Journal – Innovative Technology Education Fund


 –  Reporter, St. Louis Business Journal


The latest round of the federal Paycheck Protection Program (PPP) is attracting a flood of interest at a St. Louis nonprofit serving Black- and other minority-owned small businesses in low-income neighborhoods.

“We’ve had a deluge of demand,” said Galen Gondolfi, senior loan counselor and chief of communications at Justine Petersen Housing and Reinvestment Corp., a nonprofit community financial institution that provides capital, loans and other financial services to minority-owned small businesses and entrepreneurs in St. Louis.

The Small Business Administration last week began a phased reopening for the Covid-19 relief program that started with community financial institutions. It was expanded on Friday to lenders with $1 billion or less in assets before opening Tuesday to all lenders.

That early window of opportunity last week yielded 150 PPP inquiries to Justine Peterson, Gondolfi said. They included a mix of new and previous PPP borrowers that include “everything from a hair salon, to a retail store, to a daycare,” he said. “Some are referrals from businesses we helped in the first round.”

Justine Petersen provides a sort of concierge service to would-be borrowers, preparing and packaging the PPP applications and partnering with a peer Community Development Financial Institution (CDFI) lender in financing them. “We don’t do any advertising — it’s primarily word of mouth that has grown our demand,” Gondolfi said. “We’re providing the customer service.”

The PPP is reopening after a Covid-19 stimulus package signed into law last year allocated $284.45 billion for the program. Although similar to last year’s program, lawmakers retooled several provisions for this new round of funding, which affect who is eligible and how much borrowers can receive. The first iteration of the PPP ran intermittently last year from April 3 through Aug. 8. Through two tranches of funding, the stimulus program resulted in more than 5 million loans totaling more than $500 billion.

In the first round of PPP, Justine Petersen closed 436 loans, totaling $14.8 million, with 74% of loans going to minority small businesses. Moreover, 62% of loans went to small businesses headed by women, and 71% of loan volume serviced businesses in low-to-moderate income communities.

CDFIs such as Justine Petersen that specialize in working with Black- and minority-owned small businesses were given first crack at the new batch of PPP funding after criticism that the initial round was unevenly and unfairly distributed.

Community lenders make up about 10 percent of the program’s more than 5,000 lenders, according to the SBA. They include CDFIs, Minority Depository Institutions and Certified Development Companies.

The new money will be available to both first-time and returning borrowers. Businesses will be eligible for a second loan if they suffered a sales drop of at 25 percent or more in at least one quarter of 2020, compared with the previous year. Second loans will be restricted to businesses with no more than 300 employees; initial loans are available to larger companies, generally those with up to 500 workers.