PPP Funding Extended to August 8! What’s Next?July 6, 2020 | Category: Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
Late Wednesday, Congress voted to extend funding for the Paycheck Protection Program (PPP), which was scheduled to end on June 30, until August 8. It was signed into law on the 4th of July. To date, the PPP has distributed over $500 billion in forgivable loans to more than 4.7 million American businesses. This extension will give many small businesses, which did not initially file for the PPP, additional time to evaluate their needs. With PPP money already running low for many borrowers which availed themselves of the funding and the ongoing spread of the coronavirus continuing threatening their business, there appears to be some consensus in Washington, as to what to do with the $125 billion that remains in the program.
In recent weeks, lawmakers have been increasingly voicing support for the Prioritized Paycheck Protection Program Act (P4), which, among other things, would further extend the application deadline for PPP loans to Dec. 30, or longer. The final deadline as well as administration of P4 would be left up to the SBA.
P4 would be open only to companies that have already exhausted or are about to exhaust their PPP loans. It calls for stricter eligibility requirements and creates additional carve-outs for companies hardest hit by the pandemic. Publicly traded companies would be barred from participating.
While terms and conditions could change, here are a few provisions currently being contemplated in P4:
--Small businesses, including sole proprietors and self-employed individuals with 100 or fewer employees, may access the program. The PPP allowed companies with 500 or fewer employees to participate.
--Companies must demonstrate that the pandemic caused revenue loss of 50% or more. It’s unclear over what period businesses would need to show the loss. Under the original version of the PPP, companies needed only to show that they expected to be harmed by the pandemic.
--The lesser of $25 billion or 20% of P4 funds would be earmarked for businesses with 10 or fewer employees, as well as for small businesses in underserved and rural communities.
--Eligible small businesses could access as much as 250% of monthly payroll costs worth up to $2 million. Hospitality and lodging businesses with multiple locations would be limited to an aggregate loan amount of $2 million. The original PPP offered loans of up to $10 million.
--P4 recipients could apply for loan forgiveness as soon as 8 weeks after the loan disbursement.
More to come!