Eligible Businesses, Organizations Have More Time To Apply For Financial Assistance
Updated: July 6, 2020
Did you miss the June 30 deadline for businesses to apply for the Paycheck Protection Program (PPP) loan? No worries. The United States government has you covered.
On June 30, as the original deadline was scheduled to expire, senators unanimously consented to a five-week application extension, which would move the new deadline to apply to Aug. 8. From there, the bill moved to the U.S. House of Representatives for their approval, which was granted on July 1. Finally, over the weekend, on Saturday, July 3, President Donald Trump officially signed the bill into law.
When Congress reconvenes later this month, after it’s two-week recess, one of their top priorities will be to determine what the next round of aid for small businesses will look like.
“We absolutely believe small businesses, and by the way, many big businesses in certain industries, are absolutely going to need more help,” said Treasury Secretary Steven Mnuchin during a June Small Business and Entrepreneurship Committee hearing in Washington, D.C. He went on to say that the next round of financial assistance would need to be “more targeted” to specifically address the needs of certain industries, specifically those that have been hit harder as a result of the COVID-19 crisis, such as those in the retail, restaurants, and construction industries.
According to legislators, around $130 billion remains in the PPP’s coffers, which prompted discussion among lawmakers about what to do with the funds .As of June 30, the Small Business Administration (SBA) had approved nearly 4.9 million loans, which translates to more than $520 billion in funds for eligible small- to mid-sized businesses.
Already applied for a PPP loan? Click here to learn about the PPP loan forgiveness process.
The PPP was created earlier this year as a way to provide financial relief primarily to businesses with 500 or fewer employees, not-for-profit organizations, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. As part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, the legislation authorized the U.S. Treasury to use the SBA’s small business lending program to fund forgivable loans of up to $10 million per borrower as long as certain qualifications were met. For example, to qualify for the forgiveness provision, the majority of the funds must be used to cover payroll while a smaller portion of the loan can be used to cover the organization’s mortgage interest, rent, and utilities. To motivate loan recipients to use PPP funds as intended, the amount of loan forgiveness “may be reduced on the percentage of eligible costs attributed to nonpayroll costs, any decrease in employee headcount, and decreases in salaries or wages per employee.”
According to Sen. Susan Collins (R-Maine), who was heavily involved in the creation of the initial small-business sections of the original coronavirus bill, said that by extending the deadline to apply for the PPP to Aug. 8, lawmakers would ensure that the program would remain intact while another coronavirus relief bill is negotiated.
“What we really need to pass very soon is targeted help for those who need a second round of aid,” said Sen. Marco Rubio (R-Fla.), chair of the Senate Small Business Committee. In a tweet, he went on to state that while he didn’t object to extending the PPP deadline, he believes that the vast majority of small businesses that want the PPP funds have already utilized the program.
To learn more about the PPP and other financial assistance resources for small- to mid-sized businesses and organizations, check out the Rea & Associates’ resource center. You can also contact Paul McEwan, Doug Houser, or Matt Long, key members of the Rea & Associates SBA & PPP Task Force, for questions related to PPP and securing PPP funding and forgiveness.
By Doug Houser, CPA, MBA, CEPA (principal)
Looking for additional guidance? Check out these resources:
[On-Demand Webinar] What Is Life After Coronavirus? PPP Loan Forgiveness Application
[Blog Post] PPP Flexibility Changes Become Law
[On-Demand Webinar] What Is Life After Coronavirus? Paycheck Protection Program: The Final Chapter?