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Articles Posted in CARES Act

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President Signs New Bill Authorizing Additional Funding for PPP


Last week President Trump signed a new bill into law that provides an additional $310 billion in aid to small business owners that will be funneled into the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan program (EIDL) administered by the United States Small Business Administration (SBA).

As a recap, the PPP and EIDL was first introduced by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) to help small businesses keep workers on their payroll.

Out of the $310 additional funding, $60 billion will go toward the EIDL program, $250 billion will go toward PPP loans, and $60 billion will be set aside for community banks and community development financial institutions (CDFIs).

Additional funding was required because the first round of $349 billion in aid ran out after just a few weeks of the program being put into effect.

Small business owners who are still need of funds to help pay their company’s payroll costs should take advantage of the additional funding as soon as possible. Intense demand remains high for these forgivable-low interest loans, and funding will dry up quickly.

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For many small businesses struggling to survive in the wake of the COVID-19 pandemic, receiving a Paycheck Protection Program (PPP) loan was the only option to stay afloat.

Unfortunately, the $350 billion in aid set aside by the CARES Act has run out. While it is believed that Congress will approve a second round of appropriations to fund the Paycheck Protection Program throughout the pandemic, there is no guarantee that this will occur.


What will happen to those who applied for a loan but did not receive any funds before the money ran out?


Those who submitted a PPP application through their lenders still have a good chance of getting funded as financial institutions continue to process loan applications that were submitted. Many lenders have not gotten around to notifying borrowers that they have been approved and will be funded. Borrowers should contact their lenders to follow up with the process.

Furthermore, according to recent information provided to the American Immigration Lawyers Association (AILA) by SBA expert Chris Chan, small business owners should keep the following things in mind when considering their next steps:

  • Businesses that applied up until a few days ago still have a real shot at hearing good news from their banks. Those that have already been approved by their bank should all get money within the 10 days required by law.
  • If the loan has an SBA number attached to it, that means it made it through the initial phase of processing and will likely be part of the loan amount that’s been approved. It doesn’t mean the loan could not be denied for other reasons, but there is hope in this scenario.
  • Other loans submitted under PPP may be declined, which would free up cash under the $349 billion for other loans in the queue to be processed.
  • There is bipartisan support of adding an additional $250 to $300 billion to the program in CARES Act 2. Congress is hung up over other provisions and adaptations that they want in the program, but there was news coverage this weekend that indicated they are close to an agreement.

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In this post we would like to address some of our clients frequently asked questions regarding the Payment Protection Program, a loan forgiveness program created by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).

In response to the Coronavirus pandemic, the United States government recently passed a bill providing emergency financial relief to individuals, families, and small businesses. As you know, the majority of states nationwide have issued stay-at-home orders requiring the public to avoid all nonessential outings and stay at home as much as possible. Non-essential businesses have also been ordered to close their facilities to the public until further notice. Essential businesses have been allowed to continue to operate such as grocery stores, pharmacies, health care facilities, banking, law enforcement, and other emergency services.

One of the main provisions of the bill, known as the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), allocates billions of dollars in loans to small businesses who are feeling the economic impact of the stay-at-home orders. The CARES Act specifically authorized the Small Business Administration (SBA) to create the Payment Protection Program for the purpose of providing financial assistance to small businesses nationwide that have been adversely impacted by the COVID-19 crisis. SBA lenders began accepting loan applications from small business owners on April 3, 2020. Applications will continue to be accepted until June 30, 2020. It is important for business owners to apply for these loans as soon as possible.

  1. What is the Payment Protection Program?

In a nutshell, the Payment Protection Program is a loan forgiveness program that allows small businesses (of 500 or fewer employees) to apply for loans of (1) $10 million or (2) 2.5x the average total monthly payments of the company’s payroll costs, whichever is less.

Loans under this Paycheck Protection Program (PPP) will be 100 percent guaranteed by SBA, and the full principal amount of the loans will qualify for loan forgiveness provided that:

(1) the business was in operation on February 15, 2020 and either had (a) employees for whom you paid salaries and payroll taxes or (b) paid independent contractors as reported on Form 1099;

(2) all employees are kept on the payroll for 8 weeks and;

(3) the money is used for payroll costs, rent, mortgage interest, or utilities (at least 75% of the forgiven amount must have been used for payroll).

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Are you a small business owner feeling the pinch of the Coronavirus (COVID-19) pandemic? Have no fear, the newly passed Coronavirus Aid, Relief, and Economic Security Act (CARES) provides emergency financial relief for small to mid-sized businesses in the United States, to help business owners keep employees on their payroll.

This federal relief package allocates nearly $350 billion in emergency aid for businesses through a small business loan program called the Paycheck Protection Program. This program is separate from existing federal loan programs, including existing Small Business Administration (SBA) disaster relief loans which you may also decide to pursue.

Paycheck Protection Program

What is it about? 

The Paycheck Protection Program is a loan forgiveness program (available through June 30, 2020) designed to provide a direct incentive for small businesses to keep workers on their payroll.

For small business owners who participate, loans obtained through this program will be fully forgiven if (1) all employees are kept on the payroll for 8 weeks and (2) the money is used for payroll costs, rent, mortgage interest, or utilities (at least 75% of the forgiven amount must have been used for payroll). As an additional incentive, loan payments will be deferred for six months. No collateral or personal guarantees are required to obtain a loan.

According to the SBA, loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness is reduced if full-time headcount declines, or if salaries and wages decrease.

Please note: PPP loans are not grants, instead they are loans—the majority of which can be forgiven if used for payroll costs as outlined above.

Who is Eligible?

Any small business with less than 500 employees (including sole proprietorships, independent contractors, self-employed persons, private non-profits, and 501(c)(19) veteran’s organizations) affected by the coronavirus pandemic can apply.

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