Get ready to apply: More small business COVID-19 PPP money to be available
The House is expected Thursday to vote for $310 billion in a second round of Paycheck Protection Program funding; President Trump could sign the bill today.
If you are an employer seeking a COVID-19 Paycheck Protection Program loan and didn’t get one in the first round get ready because a new $310 billion infusion into the PPP pot of cash will soon be available.
Hustling to your lender doesn’t mean you will get it — the funding was swiftly exhausted in the first round. But if you wait, you won’t be in the game.
The House is poised to vote Thursday afternoon for a fourth coronavirus relief measure totaling $483 billion. The bill includes the $310 billion PPP money. There is also money in the bill for hospitals and more COVID-19 testing.
President Donald Trump could sign the rescue measure as early as Thursday.
RUN. DO NOT WALK. THERE WILL BE A PPP LOAN RUSH
The PPP program was designed to help small businesses and nonprofits with fewer than 500 employees to meet payroll and some operating expenses.
The initial $346 billion for PPP loans ran out in two weeks because if the cash is used as intended, it does not have to be repaid.
It turned out that millions of dollarsof PPP loans went to companies with other access to capital under what now seems like a loophole. Some hotel and restaurant chains were able to apply on behalf of each outlet, avoiding the 500-worker ceiling because no one location employed more than 500 people.
The Shake Shack chain is returning a $10 million PPP loan.
It also turned out that some banks put their best customers at the head of their line; relationships counted.
What may help is that $60 billion of the $310 billion in this new round is set aside for community banks and other small lenders.
The measure Congress is sending to Trump to sign does not seem to have addressed these other problems of an unfair system.
Rep. Brad Schneider, D-Ill., a member of the House Small Business Committee, said in a newsletter, “The stories of large, publicly traded companies who were able to jump the line and take funds intended for small Main Street businesses are completely unacceptable.
“The Administration must do a more effective, more transparent job distributing this second round of funding to those most in need.”
On Wednesday afternoon, Schneider said committee members discussed problems with the first PPP rollout with SBA Administrator Jovita Carranza, who is from Skokie.
Schneider said in a statement he “urged the SBA to clearly communicate to lenders under the Paycheck Protection Program (PPP) so that once the House passes and the President signs into law additional funding for the program (expected today), lenders have the necessary guidance and technical support to get funding out the door.”
He added, “I’ve spoken with numerous businesses in my district, many of whom received PPP loans, but also many of whom have been locked out of the program. I’ve also heard from many banks in our community, some that say that they were able to secure PPP loans for almost 99 percent of those who applied, and others that seemed to have had almost the opposite results. It is imperative that the SBA fix the many back-end problems that bottlenecked lenders from getting loans approved — like the SBA’s eTran system — so that the Administration can properly disburse this next round of funding efficiently and effectively.”
In his newsletter, Schneider said, “Our office is strongly encouraging small businesses, nonprofits, faith-based organizations and other eligible entities to prepare all appropriate documentation so that, if you have not already done so,you are ready to apply for the Paycheck Protection Program as soon as it reopens. Funds are expected to again go quickly, and interested applicants should contact their lender to ensure they are prepared to take full advantage of the opportunity.”