The Paycheck Protection Program (PPP) was created in March, near the beginning of the coronavirus pandemic shutdown, to provide an incentive and financial resources for businesses to maintain employees on their payroll and avoid adding even more to the tidal wave of unemployment that resulted when the American economy ground to almost a complete halt. Since its creation, lawmakers have amended it twice, adding funds to the program and also easing requirements about how the loan proceeds could be used to qualify for loan forgiveness — the program’s most popular feature.
Now, President Trump has signed into law a bipartisan extension of the program, which was set to expire on June 30. Employers now have until August 8 to apply for some of the $130 billion remaining in the program. Earlier, the PPP Flexibility Act of 2020, passed and signed into law in early June, gave borrowers until December 31, 2020, to utilize the funds received from the loan (extended from the original deadline of June 30), though borrowers who wished to utilize their funds by the original June 30 deadline retained the ability to do so.
To apply for your business, start by visiting the website of the Small Business Administration (SBA), which administers the program (https://www.sba.gov). In addition to the PPP, the SBA also administers Economic Injury Disaster Loan (EIDL) advances, Express Bridge Loans, and debt relief programs for small businesses; you can learn more about these programs here. There’s also a new, short-form application for PPP loan forgiveness, available here. To find out if your business qualifies to apply using the short form, click here.
Remember, though the PPP program is administered by the SBA, the actual loans are being made through lending institutions that are approved to offer the program. This means that you will need to submit your application for the loan through your existing bank or another institution that has been approved by the SBA. To find a list of approved lenders for your state, click here. Most lenders provide an online application tool that you can use to get started.
If you receive a loan, any portion that is not forgiven may be repaid over a five-year period at 1% interest. For many small businesses, this could be a lifeline. If you use at least 60% of the funds to cover payroll expenses (which can include company health benefits, sick leave, parental leave, and other expenses related to payroll), you can use the other 40% for costs like leases, rent, or utilities for your business and still qualify for 100% loan forgiveness. But even if you don’t obtain full loan forgiveness, remember that you are still getting very favorable repayment terms. After all, when was the last time you borrowed money at 1%?
If you would like additional help or guidance for your small business, please get in touch with me. If you’d like to read my recent article on recent developments in the PPP program, click here.
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