COVID-19 news and updates change quickly and frequently. Some of the information in this article may soon be out of date. We will do our best to keep details updated during this challenging time. The article below reflects information as of April 24, 2020.
Updated: In March, the federal government signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES ACT allocated $2 trillion in federal relief funding for individuals and small businesses impacted by COVID-19.
The CARES Act harbored the Paycheck Protection Program (PPP), a forgivable loan for small businesses and sole proprietors. The PPP was capped at $349 billion and within 12 days all of the funds were exhausted.
On Friday, April 24, new legislation was signed into law adding $310 billion to the PPP budget. This is what we know:
- The Small Business Administration (SBA) will share details on when the online portal for applicants will reopen. Expect applications to reopen early next week (the week of April 27). You should contact your financial institution immediately, ahead of these updates.
- The expansion of funds contains different guidelines from the first round of funding, including:
- $30 billion for business with less than $10 billion in assets
- $30 billion for businesses between $10 billion and $50 billion in assets
- $30 billion for rural businesses
- $30 billion for minority businesses
- $30 billion for women-owned businesses
- Banks should have kept applications that were not submitted during the first round of funding. Business owners should check with their bank directly to learn the status of their application. There will likely be a queue when the portal opens.
- In many instances, small businesses experienced more success working with a community bank or smaller financial institution. If you have a pending PPP loan application with a large bank, consider submitting through a smaller institution.
- This next round of funding is expected to be allocated quickly— in as little time as one week. Time is of the essence. You should reach out to your financial institution as soon as possible.
The content below reflects information as of April 3, 2020.
On Friday, April 3, 2020, small businesses and sole proprietorships can apply for loans under the Coronavirus Aid, Relief, and Economic Security Act’s (CARES) Paycheck Protection Program (PPP). We wanted to share the following information with you —as well as helpful links— to understand how this can influence your business.
- Beginning on Friday, April 3, 2020, both small business and sole proprietorships can apply for loans under the PPP through existing Small Business Administration (SBA) lenders. On Friday, April 10, 2020, independent contractors and self-employed individuals will be able to apply for the PPP loans through SBA lenders as well.
- The CARES Act was signed into law on Friday, March 27, allocating $2 trillion in federal relief funding for individuals and small businesses hurt by COVID-19.
- The PPP is a forgivable loan. This means if you are able to maintain the parameters of PPP it (essentially) turns into a grant. Forgiveness is based on the employer maintaining or quickly rehiring employees, and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
- The PPP will cap at $349 billion. You should apply as soon as possible, as applications will be reviewed in the order they are received.
- The program is designed to help small businesses keep their workers employed by providing financial support to payroll and select other expenses through June 30, 2020.
How to qualify for the Paycheck Protection Program:
According to the U.S. Department of Treasury, “Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.”
Take action now:
The initial PPP information encourages businesses, like yours, to apply as quickly as possible. There are concerns that high demand will cause the PPP to quickly reach its funding cap of $349 billion.
- From the U.S. Department of Treasury: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses
- Link to application: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
- Become.co: https://www.become.co/cares-act/paycheck-protection-program/