On Friday, April 24, 2020 President Trump signed into law H.R. 266 the “Paycheck Protection Program and Health Care Enhancement Act.” This law provides an additional $484 billion in emergency supplemental funding for the Paycheck Protection Program (PPP) and CARES Act. The measure contains approximately $320 billion for the PPP, meant to help small businesses obtain loans. The Act earmarks an additional $75 billion for hospitals, $25 billion for coronavirus testing and another $60 billion for the Small Business Administration (SBA) Economic Injury and Disaster Loan program.
On Monday, April 27, 2020 the PPP loan program reopened with an additional $320 billion available for small businesses. The PPP loans of up to $10 million, or 2.5 times a company’s average monthly payroll, are forgivable if employers retain employees at salary levels comparable to what they earned prior to the crisis, capped at $100,000 per employee. Funds can also be used to pay interest on mortgages, rent, and utilities. The PPP waives all SBA fees and provides deferral on loan repayments for a minimum of six months up to a maximum of one year.
In April, the PPP received $350 billion for 100% federally backed loans and certain payroll and overhead expenses; however, those funds were quickly exhausted as businesses across the country rushed to receive the loans. Although these funds were intended for small businesses, it was discovered that over 100 publicly traded companies received PPP loans. On Thursday, April 23, 2020 the Treasury Department announced a May 7, 2020 deadline for these companies to return the aid. In a guidance document issued on Thursday, the Treasury Department stated that small businesses must certify in good faith that the PPP loan request is necessary to support business operations.
Small business owners interested in PPP loans should not wait to apply because the funds will likely run out once again. As the PPP is administered by banks and other lending institutions, small business owners are advised to reach out to their lenders as soon as possible to start the application process. Businesses that have already started the application but have not yet been approved are encouraged to contact their lenders as soon as possible to ensure their application is being processed.
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