Additional Funding Provided for Small Business and Non-Profit Loans Under the Paycheck Protection Program
Poole College of Management’s Bonnie Hancock, professor of practice and executive director of the enterprise risk management initiative, gives an update regarding the popular Paycheck Protection Program (PPP).
New legislation has just been enacted to provide an additional $320 million in funding for the Paycheck Protection Program, which was a part of the CARES Act. The initial allocation of $349 billion for the loan program was very quickly exhausted when the Small Business Administration (SBA) was inundated with loan applications. The loan program was very popular as it provided for 100 percent federally guaranteed loans with two-year terms and interest of only 0.5 percent. Payments are deferred for six months and, most importantly, these loans may be forgiven if the organization maintains its payrolls during the crisis or restores its payroll afterward.
Businesses that have already applied do not need to re-apply in order to be considered in the next round of funding. Further, once you have made an application, your organization will be assigned a unique number that will prevent you from applying multiple times.
While some banking trade groups are estimating that the additional funding will also be quickly exhausted, businesses that qualify for these low-interest loans should still apply, but they should do so quickly. Applications and the loans are made through a bank and then the SBA must approve the loans in order for the loans to receive a federal guarantee and be eligible for partial or full forgiveness. Approximately $60 million of the new funding has been allocated specifically to small, mid-size and community lenders, so applying through one of those lenders that has experience dealing with the SBA could possibly improve an organization’s odds of being approved.