The PPP program’s restart comes at a time when U.S. businesses are struggling with almost no end in site. The Paycheck Protection Program was originally funded by Congress at $349 billion and then again at a level of $310 billion. Currently PPP is in its second round of appropriations of the program; the portal opened on Monday, April 27. Loans are made by banks and other lenders with delegated authority as authorized by Congress; they directly utilize their funding and private capital to make these loans which are guaranteed at 100% by the U.S. Small Business Administration. PPP loans are intended to do what its name suggests: Protect Payroll - specifically keeping American workers employed.
The Small Business Administration (SBA) said Monday afternoon that it had successfully processed more than 100,000 loans from more than 4,000 lenders, with the second round of the Paycheck Protection Program (PPP) yesterday.
President Donald Trump signed the $484 billion COVID-19 rescue bill on Friday, it includes new money for the latest bailout. The first round of PPP funding ran out of cash within days of being released on April 3.
The latest bill provides $60 billion for small lenders and will be split between banks with less than $10 billion in assets and those with between $10 billion and $50 billion. It’s an effort to boost the participation of credit unions and who say they were edged out of the first round by big banks.
The cornerstone of the CARES Act is the Payroll Protection Program, or PPP. If small businesses use 75% of their loan towards payroll and keeping their employees on, the entire amount of the PPP loan is forgivable. SBA also has a Lender Locator online that can assist small business owners and entrepreneurs find eligible lenders who may participate in the Paycheck Protection Program.
“The PPP has supported more than 1.66 million small businesses and protected over 30 million jobs for hardworking Americans,” Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza said in a joint statement. “With the additional funds appropriated by Congress, tens of millions of additional workers will benefit from this critical relief.”
The PPP loan was crafted to keep workers of small businesses on the payroll. The loan will be forgiven if employees are kept on the payroll for eight weeks and if the money is used for payroll, rent, mortgage interest or utilities.
Applications can be made through any SBA 7(a) lender or through any federally insured depository institution, federally insured credit union or participating Farm Credit System. The SBA has said other lenders will be available to make these loans once they are approved.
For employers unfamiliar with which banks or credit unions are offering the program, the SBA provides a link to search for eligible PPP lenders by zip code.
The main four categories on financial assistance that SBA is providing for COVID-19 relief, in additional to normal programs, include:
- The Paycheck Protection Program
- Economic Injury Disaster Loan (EIDL) Advances
- The traditional EIDL program
- Express Bridge Loans and
- Debt Relief to pre-COVID disaster loan recipients and a one year deferment on any COVID-related EIDL.
The SBA Resource Partner Network, in addition to providing business consulting, mentoring and training services now virtually through mediums such as Skype, Zoom, FaceTime, and telephone among others, can also assist small businesses with completing necessary paperwork and gathering information needed to apply for these types of assistance, all for free. Resource partners include Small Business Development Centers, SCORE, Women’s Business Center and Veterans Business Outreach Centers to name a few.
The Metro New York SBA 2020 Resource Guide can be found online here.
The SBA is maintaining an updated website here with resources and guidance for small businesses.
The U.S. Treasury has also posted an FAQ list with answers to three dozen of the most-asked questions about the program. One can enter their zip code and map local lenders eligible to participate in the PPP. For a list by state of PPP participating banks and lenders from the first round of funding, click here.