Additional funding is on the way for small businesses in the form of low-interest and potentially forgivable loans as part of the federal government’s stimulus program in response to the COVID-19 pandemic.
On April 24, the President signed the expansion of the popular Paycheck Protection Program (PPP) and Economic Injury Disaster Loan program (EIDL), as part of the Paycheck Protection Program and Health Care Enhancement Act (the PPP Enhancement Act). The new law provides the following funding for small businesses with less than 500 employees:
- $320 billion for PPP loans, and
- $60 billion for EIDL grants
This additional funding will permit businesses that have not yet received PPP loans or EIDL grants or loans under the Coronavirus Aid, Recovery, and Economic Security Act (CARES Act) to receive needed funds. As was widely reported, the initial round of PPP and EIDL funding went fast. As lenders expect the same demand with this infusion of new money, make sure you apply quickly for the relief.
Set Aside for Smaller PPP Lenders: While the CARES Act permits all existing SBA-certified lenders authority to process PPP loans, the PPP Enhancement Act also specifically sets aside $60 billion for disbursement by certain smaller insured depository institutions, credit unions, and community financial institutions. By setting aside PPP funding for these smaller lenders, such lenders will have the opportunity to support community development and minority-owned institutions and businesses in a more targeted way than accomplished under the CARES Act.
New PPP Application Guidance: The SBA has issued new guidance on the application that companies must complete to obtain a PPP loan. Applicants are required to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations” of the applicant. Now the SBA is advising applicants to take into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to their business before applying for a PPP loan.
- The SBA amended their PPP frequently asked questions document to ensure that the program operates as Congress intended.
- Please click here to read the complete text of the CARES Act.
- Please click here to read the complete text of the PPP Enhancement Act.
- Please click here to read GlobalTranz’s summary of the CARES Act.
For updates and more information, please contact your GlobalTranz representative or contact us at 877.980.2709 or via email at email@example.com.