After passing a $2 Trillion package in March, on April 21, 2020, the Senate unanimously passed another bill (the Paycheck Protection Program and Health Care Enhancement Act) which provides almost $500 Billion in new funding for COVID-19 related relief. The vast majority of the money appropriated in the bill will go to small businesses hit so hard by the coronavirus pandemic, while the remainder was earmarked for hospitals and expanded coronavirus testing. Here's a more specific breakdown of how the nearly $500 Billion will be distributed:
The full text of the bill can be found here: https://www.congress.gov/116/bills/hr266/BILLS-116hr266eas.pdf This bill will likely become law shortly (perhaps by the end of the week), as the House is expected to pass the bill on Thursday, and the President has expressed support via Twitter. What are the next steps for Small Businesses? While the availability of significant new funding is good news for small businesses, they will have to act fast if they wish to get any share of the new Federal relief. The first thing any small business who is considering applying for a PPP loan should do is contact their current lender. If your business has no existing relationship with a lender, consider contacting the Small Business Administration, who administers the PPP program, for names of lenders in your area eligible to make PPP loans. You can also go directly to the SBA site to find eligible lenders in your area: https://www.sba.gov/paycheckprotection/find Make sure to ask the lender what information/documents will be needed to complete the application. While each lender's requirements will vary, typically a small business will need the business's legal name and address, as well as records of corporate formation, tax returns or other documents that show payroll, mortgage or rent documents, and potentially evidence of good standing. Small businesses may also wish to check out the SBA's PPP Information Site. Small businesses will also need to determine when they will need to submit an application. The short answer is quickly, if it wants to be sure to secure a loan. Given how quickly (about 2 weeks) $349 Billion in loan funds ran out the last time, small businesses are well advised to be prepared to apply as soon as the SBA announces that the funds are available for this latest round of PPP loans. Keep in mind that some small businesses may not need to apply, if they already did earlier before the last round of funding ran out. Because the PPP Interim Final Rule allows small businesses to apply for only one PPP loan. This means that any business which already applied for a PPP loan should check with their bank about the status of the original application before applying again. Small businesses who have not submitted a PPP loan application but wish to do so now that new funding is available, should get their application ready. Contact your bank as soon as possible to understand eligibility, processing, and what supporting information/documents will be needed for the application. There remains a large backlog of applications for small businesses who applied for PPP loans during the first round of funding. It remains to be seen whether these loans will be processed first now that new funding is available. Many believe that they will. All the more reason that small businesses who did not apply before will need to act quickly. |
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