The Paycheck Protection Program (PPP) enables businesses to apply for a loan of up to 2.5 times their monthly payroll costs, up to $10 million. These loans are fully forgivable if businesses use 75 percent of the funds for payroll and can prove that they met certain conditions like rehiring laid off workers.
Today, April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was signed into law. It provides an additional $310 billion of funding for the depleted PPP, with $60 billion earmarked for small businesses.
Unlike the first round, the new law specifically set aside $60 billion for community banks and smaller credit unions, with the purpose of helping mom-and-pop businesses frozen out of the first round.
If you’re a small business, it also supports choosing community banks and smaller credit unions to obtain a PPP loan, rather than the larger banks, who have prioritized larger customers. Accordingly, if you have a pending PPP loan application at a large bank where you have no idea of the status, or, if you have not even applied yet for PPP, consider using a community bank or smaller financial institution instead. Get your application submitted ASAP, as the newly approved funds should be gone within a matter of days.
The new funding measure also includes an additional $10 billion for the Economic Injury Disaster Loan (EIDL) program. EIDLs are typically issued in the aftermath of natural disasters such as hurricanes, fires or earthquakes (but the COVID-19 crisis qualifies). It provides an up to $10,000 ($1,000 per eligible employee) forgivable loan advance, as well as low-interest loans up to $2 million. You can't get both a PPP loan and an EIDL, but the EIDL may be an option if the PPP funds run out.
If you haven’t already applied, small businesses should apply ASAP and we recommend choosing community banks or smaller credit unions.
To apply, at a minimum, you will need: