Late April 23, Congress passed a second coronavirus relief package; this $484 billion package includes $310 billion to replenish the Paycheck Protection Program (PPP). Given that the initial funding for PPP passed at the end of March was depleted within two weeks, now is the time to apply for this new funding if you missed out the first time.
The PPP is part of the CARES Act and provides a direct incentive for small businesses to keep their workers on payroll. The maximum loan amount is determined by multiplying the average monthly payroll by 2.5 as defined in the CARES act. Qualified uses of the loan proceeds include payroll, mortgage interest, rent and utilities; potentially, the loan can be 100% forgiven on a tax-free basis if at least 75% of the funds are used for payroll costs, the company maintains its number of employees, and employee salaries and wages are not reduced by more than 25% compared to the most recent quarter preceding the loan.
Many of those who initially applied for PPP in early April are frustrated that they’ve yet to receive any money as a result of so many small businesses throughout the country fighting for the same pool of aid. For those who filed their application earlier in the process and were approved, the PPP money is starting to be received. For those with pending applications, there is not a need to reapply and banks will continue to process these applications with the SBA when the additional funds are available. It also comes down to the lender through which they applied for the loan, too. There were—and still are—many unanswered questions on the process, and loan forgiveness.
We will continue to provide updates as they are available.