On April 24, 2020, President Trump signed the $484 billion stimulus bill known as the Paycheck Protection Program (PPP) Enhancement Act to add more money for small business funding. With $310 billion more to go to PPP loans, $60 billion was specifically allocated to go to smaller banks and credit unions for these programs. With the first round of CARES Act funds already exhausted, it is estimated that only about 20% of small businesses thus far have been able to secure PPP loans. According to the SBA’s statistics, during round 1, the average loan amount of the 1.6 million loans issued so far was $206,000.
Due to public outcry, investigations, and even lawsuits, owing to the way the first round of funding was handled, the SBA has now released further guidance on eligibility of large companies, hedge funds, and private equity firms.
Because the CARES Act SBA programs have generated strong response, be patient once you have applied. You may even have to wait a few weeks to receive your money. Check your bank account regularly, as you may not receive official notification when the funds are deposited. For those who have already submitted their loan applications, you may want to check with your financial institution. If you applied to the SBA directly, you may need to reapply. Here are the latest FAQs from the Treasury Department on PPP loans.
The CARES Act outlines several ways that small businesses can get funds. There are SBA grants in addition to the Paycheck Protection Program (PPP) loans and SBA Disaster Loans (EIDL). There is also the Small Business Debt Relief Program to help with current SBA loans. To help navigate the various funding available please visit the SBC site The Small Business Owner’s Guide to the CARES Act found here.
Note that an Economic Injury Disaster Loan may be a helpful way to keep your business afloat. The PPP Enhancement Act expands eligibility for these loans to include agricultural businesses with 500 or fewer employees. The loans can be used to pay fixed debts, payroll, accounts payable, and other bills that you have incurred due to the pandemic. Just be aware that if you also apply for a paycheck loan, the economic injury loan may not be applied to payroll.
If you are eligible for an EIDL, you are also eligible for an SBA grant. The SBA grants, sometimes referred to as advances, allow independent contractors, gig workers, small businesses with 500 or fewer employees, private non-profits, veterans organizations, sole proprietorships, and tribal small business to apply for a government grant of up to $10,000. There is a $1,000 cap per employee, up to $10,000. You must have been in business as of January 31, 2020. Grants are only available until December 31, 2020.
For guidance regarding your specific situation, contact your Davis Miles McGuire Gardner attorney. If you’re new to the firm, contact any member of our COVID-19 business task force. Click the “text us” button on your screen to get a conversation started.