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Note: Due to funding no longer being available through the US Small Business Administration (SBA) for the Paycheck Protection Program (PPP), Revenued is no longer accepting applications.
The Paycheck Protection Program (PPP) is a Small Business Administration (SBA) loan program established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses keep workers on their payrolls.
The initiative provided forgivable loans to small businesses in exchange for not laying off employees during the COVID-19 pandemic. It gave small business owners much-needed funds and optimism and safeguarded hundreds of thousands of jobs. MIT’s early evaluation report showed the program also boosted employment by 2% to 4.5% at eligible firms and improved U.S. employment to 3.2 million jobs.
The program ended on Aug. 8, 2020, with the SBA no longer accepting applications. Reports of a spike in jobless claims triggered talks of a PPP extension; however, reauthorizing the program has been stymied because Republicans and Democrats cannot agree on another coronavirus relief package.
Let’s take a closer look at the SBA Paycheck Protection Program (PPP).
Small businesses accepted into the SBA program prior to the deadline may be eligible for loans equal to two and a half times their monthly payroll costs — up to a maximum of $10 million. These loans were provided by banks and other lenders and backed by the federal government’s SBA.
The SBA administers current PPP loans according to the following terms and conditions:
To be qualified for an SBA PPP loan, a business must have been impacted by the COVID-19 economic shut-down and meet at least one of the following criteria:
As we stated above, one of the main program objectives is to incentivize business owners to keep their workers employed. Because of this, small businesses must follow specific spending criteria to be eligible to have part of their obligations forgiven. Criteria include:
To receive loan forgiveness benefits, you must maintain your full-time employee headcount or rehire workers and sustain salary levels. If not, the SBA will reduce the amount of forgiveness eligibility.
The full-time headcount and maintained wages criteria are based on the following time periods chosen by the loan applicant:
The PPP loan forgiveness window is an eight- to 24-week period following loan approval. During this interval, the business should maintain meticulous accounting of how the funds are being spent. Initially, program guidelines held PPP loan applicants to an eight-week loan forgiveness window. The government extended the window to 24 weeks following changes approved on Jun. 5, 2020.
After the 24-week window closes, the borrower has 10 months to reach out to the loan issuer and submit proof of how they spent the money. Once the lender processes this request, the SBA will issue a determination. The SBA’s decision usually comes within 60 days of the forgiveness application. The loan holder will not have to pay on the debt during these 10 months; however, interest will begin accruing.
If a business owner does not apply for forgiveness or is denied for any reason, he or she must make their loan payments and applicable interest after the 10 months have elapsed. If partial forgiveness is granted, the loan payment amount and interest are based on the unforgiven portion.
The federal government created the PPP as a short-term SBA initiative to help small businesses outlast the economic shut-down without scores of layoffs and dramatic increases in unemployment claims nationwide. Congress allotted nearly $650 billion for this program in the spring of 2020.
Though the SBA is no longer accepting new applications, small businesses can apply for forgiveness on loans approved before the August 2020 cutoff. Contact the SBA or your loan servicing partner for more details on how to have your PPP loan forgiven.
Fill out our online form to be added to the Revenued PPP waitlist and become one of the first to learn about the SBA’s next potential round of COVID-19 funding. We’ll email you with information as soon as it becomes available, or call +1-877-662-3489 for more information.
Note: Due to funding no longer being available through the US Small Business Administration (SBA) for the Paycheck Protection Program (PPP), Revenued is no longer accepting applications.
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