PPP and EIDL Programs Extended
The Paycheck Protection Program application deadline has officially been extended to August 8th.
Under the program, the SBA had approved almost 4.9 million loans, totaling $520.6 billion. Despite the program’s popularity, it had approximately $130 billion in unallocated funds when it shut down on June 30th.
Created as part of the CARES Act, the PPP offers forgivable loans of up to 2.5 times a business’ average monthly payroll costs, up to $10 million.
The recent easing of the forgiveness restrictions through the Paycheck Protection Flexibility Act further increases the possibility of a business receiving full or partial loan forgiveness if they meet certain criteria, including using 60% of their PPP funds on payroll and maintaining staff headcount.
The SBA has also released a new EZ application for loan forgiveness, streamlining the required paperwork down to a two-page document for those who qualify, which will likely be the majority of borrowers.
Congress is also debating a new piece of legislation, The Paycheck Protection Small Business Forgiveness Act. Specifically, the ACT would forgive PPP loans of $150,000 or less if the borrower submits a one-page attestation form to the lender. It also ensures the lender will be held harmless from any enforcement action if the borrower’s attestation contained falsehoods.
The new deadline for PPP applications combined with the relaxed forgiveness rules may make it easier for those who haven’t yet applied to pursue access to remaining funds.
EIDL is Accepting Applications
In addition to the PPP, the SBA has also reinstated the Economic Injury Disaster Loan program, which provides funds for industries struggling to stay afloat in the wake of the coronavirus or any other qualifying disaster. PPP borrowers are eligible to also apply for EIDL loans, but the monies must be used for separate expenses.
EIDL interest rate is 3.75% for small businesses and 2.75% for nonprofits with a 30 year term. The first payment is deferred for one year. A business that qualifies may also be eligible for a one-time EIDL Advance grant of $1,000 per employee, up to a maximum of 10 employees and $10,000. You can apply for and receive an EIDL Advance even if your EIDL application is not approved.
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