Did Your Small Business Miss Out on PPP Funding? Get Ready for the Next Round

Shippo Snippets:

• New legislation passed by the House and Senate was signed into law by President Trump on April 24, 2020
• Law pumps an additional $320 billion into the Paycheck Protection Program (PPP) to help small businesses meet payroll and keep business doors open
• Funds will be first-come, first-served
• $60 billion of PPP funds will go to small- to medium-sized financial institutions to attempt to broaden availability
• Additional sources of funding are also available to small businesses

The Story:

On April 3, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, qualifying small businesses could be eligible for emergency funding—called the Paycheck Protection Program or PPP—to cover payroll expenses and keep the doors of the businesses open. 

This lending program was funded with $349 billion, to be administered by the Small Business Administration (SBA), and the funds were intended to be available through June 30, 2020. In less than two weeks, though, the pool of lending dollars was empty. Business going to the SBA application page saw this:

After the Senate passed new legislation by voice vote on April 21 that allows for more small business funding—and the House voted in favor of it, 388-5, on April 23—President Donald Trump signed this $480+ billion legislation into law on April 24, 2020. 

PPP now has another $320 billion in funding for small businesses. 

About $60 billion is earmarked for small lenders and community financial institutions to expand this program to a great number of small businesses. About half of this $60 billion would go to community lenders, small banks and credit unions with less than $10 billion in assets. The other half would go to medium-sized lending institutions, those with $10,000-$50,000 billion in assets. 

Legislation was crafted in this way to help small businesses that may have been underserved in the first round of PPP, including rural and minority-owned companies that may not already have a relationship with a lender. 

This more than $480 billion expenditure includes the following:

• $75 billion is being provided to hospitals to cover costs incurred because of the virus and because of revenue otherwise lost because of it
• $60 billion is being provided for the Economic Injury Disaster Loan program (EIDL), $10 billion of which will go for emergency grants for businesses
• $25 billion is being earmarked for expanded COVID-19 testing

In this new bill, language was added to clarify that farmers and ranchers do qualify to apply for this assistance.

As of yet, no date has been announced for when the additional PPP funding will actually be available to small businesses. But, last time, it was first come, first served—so if you plan to apply, be ready to do so quickly. To help you get ready, here’s what the application looks like. If there’s anything on there where you’ll need to gather more information, now’s the time.

More About the PPP

The PPP program:

• Was established in the third COVID-19 relief and economic stimulus package, the $2.2 trillion CARES Act
• Aims at helping small businesses (500 employees or fewer) to keep workers on their payrolls and their businesses up and running through the provision of potentially forgivable loans
• Provides up to $10 million in funds per business
• Doesn’t require collateral or personal guarantees for the loans

If your small business’s employees are kept on the payroll for at least eight weeks after you receive PPP funding—and if this money is used solely for qualifying expenses—the SBA may forgive these loans. Seriously!

Qualifying expenses include payroll, mortgage or rent payments, utilities, or interest. More about that later in this post. 

How to Apply for PPP—Once Available

For round one, the SBA vetted commercial lenders and approved the ones that could administer these loans. These lenders can approve the loans from the available pool of money that they have access to. Once funds are available in this second round of PPP funding, you can forward an application and your payroll documentation to one of these approved lenders.

You can find more specifics about the application process here. And, here is a list of lenders to consider, published on April 23, 2020.

If you’d already submitted an application to PPP, now’s the time to check in with your lender, if you haven’t heard back. The same is true if you’ve applied for an EIDL and haven’t gotten a response yet. Find out if your application will be automatically resubmitted to the SBA when the funding gates open again. If so, great. If not, then prepare to reapply at a qualifying lender, either the same one you used before or another one. As an FYI, your small business can only apply for one PPP loan.

PPP Forgiveness Parameters

It’s possible for businesses to get their PPP funding forgiven—meaning that they wouldn’t have to pay the money back. For that to happen, the funds need to be used in very specific ways. For example:

• 75% of the funding must be used to cover payroll costs
• There can’t be reduced compensation or reductions in staff during this period
• 25% of the loan amount can be used to cover expenses that aren’t connected to payroll, such as your mortgage and utilities 

If you receive funding and want to help ensure that you receive forgiveness, work closely with your lender. You can also refer to the SBA coronavirus relief page and this US Chamber of Commerce page.

What’s Not in the Bill

What’s not included in this bill: additional funding for the state stabilization fund that was provided in the CARES Act. Democratic leaders have been advocating to replenish this fund, which provides support for state, local, and tribal governments to help ensure that essential workers continue to get paid.

Leaders from both political parties have said they will now focus on the next large coronavirus aid package. So, if your small business is seeking funding from your state, county, city or tribal government—and you were told that funds were already dispersed—then more help may be coming when round two of PPP funds becomes available. 

Going Beyond Government Resources

If your small business needs support, explore other options for funding and work with vendors that provide that support. For example:

•  Local Initiatives Support Corporation (LISC) is offering small business relief grants in the amounts of 5,000, $7,500, and $10,000; you must apply by Tuesday, April 28th, 2020.
• Inc.com lists dozens of grants and is updating this page as new information becomes available.
• Forbes.com is listing state funding options along with other available grants. 
• Women’s Business Enterprise National Council has a focus on female-owned businesses, and also provides more general resources and funding information.
• Grant Watch lists plenty of grant opportunities with deadlines clearly marked.

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