Today, the President signed into law the “Paycheck Protection Program and Health Care Enhancement Act”.
Among other things, this legislation provides an additional $310 billion for the Small Business Administration (SBA) to issue loans and loan forgiveness under the Paycheck Protection Program (PPP).
It is unclear when the SBA will resume accepting or processing PPP loan applications. While hopes are that this would be done immediately, given all of the snags this and other covid-response programs have experienced, no one should be surprised if it takes another day or two for SBA to reopen the PPP program.
Therefore, as previously advised, applicants – along with their banks – should monitor this site to see when the SBA reopens the PPP program – especially if they are waiting to submit an application.
There are certainly many PPP applications that were previously submitted but which were not processed by SBA after the program was suspended for lack of funds last week. Additionally, there are many applications on hold that banks were unable submit to SBA for the same reason.
It should be expected that the banks will submit, and that SBA will process, applications in the order in which they were received as soon as the SBA reopens the program. Again, applicants and their banks should closely monitor the SBA site for when this process will resume.
There have been a number of reports that not all banks have been user-friendly in this process, especially the larger banks which have, in some cases, received hundreds of thousands of applications. It has likewise been reported that the smaller banks have done a much better job. In response, in this new bill Congress has set aside $60 billion of the $310 billion in new PPP funding for community banks and credit unions to process. Applicants that have struggled with unresponsive banks should consider contacting these smaller institutions. Here is the link to the SBA “find an eligible lender” page that may be helpful.
https://www.sba.gov/paycheckprotection/find?pageNumber=1
The new covid-response legislation also includes an additional $60 billion for the Economic Injury Disaster Loans (EIDL) program. Contrary to early guidance, and because the $10,000 ‘grants’ under this program were being used-up so quickly – SBA has implemented a $1,000 cap per employee on these grants, up to the maximum $10,000. Thus, for example, a business with 4 employees would be eligible to receive only $4,000 up front, as opposed to the originally stated $10,000. This program is also available to 1099 independent contractors (crew) and sole proprietors of small businesses.
With further regard to the self-employed, SBA clarified in their two final rules for the PPP program that small businesses cannot score their payments to 1099 independent contractor employees (eg. crew) as “payroll” in calculating the amount of their PPP loans. Instead, SBA decided to make the self-employed, including 1099 independent contractors, apply on their own for PPP loans and loan forgiveness – separate from their employers.
Once again, SSA urges anyone that has yet to contact their banks and apply for a PPP loan to read these two SBA final rules which include relatively simple explanations of how the PPP program works through a series of simple Q&As.
Here is the first final rule: https://home.treasury.gov/system/files/136/PPP–IFRN%20FINAL.pdf
And here is the second rule that clarified the rules for the self-employed including 1099s.
https://www.sba.gov/sites/default/files/2020-04/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf