Replenishing the PPP Loan with additional $320 billion
First Come, First Serve, Apply Now if you haven't already!
After the $349 billion allocated to
small business Covid-relief loans
lasted all of two weeks,
Congress reached an agreement Tuesday to add an additional $320 billion in funding. The
Senate passed the bill
Tuesday afternoon, and the House is expected to vote as soon as Thursday.
The $320 billion will go to the
Paycheck Protection Program (PPP)
, which provides government-guaranteed loans to small businesses. If, after eight weeks, the businesses show that they used at least 75 percent of the loan for payroll, the loan can be forgiven.
The new relief package guarantees that at least $30 billion of the new funds
will be designated for community banks
so that they don't have to compete with larger institutions. Because lenders now have a backlog of applications, this money is expected to go quickly, too.
Congress also allocated $60 billion for the Economic Injury Disaster Loan program. That money is supposed to be used for working capital. Businesses were able to ask for the first $10,000 of any loan as an advance, which would not have to be paid back if the loan was denied. Because of the demand for the loans, that advance quickly dropped to a maximum of $1,000 per employee. The SBA received loan requests worth more than $400 billion through the program, which had only $10 billion in funding initially, according to Ami Kassar, the founder and CEO of MultiFunding, a small-business loan adviser in Pennsylvania.
It wasn't until April 10 that independent contractors and other self-employed people were able to apply for the loans, and Treasury didn't release guidance on how their payroll should be calculated until April 14. By April 16, all the money was spoken for--while precious few business owners had actually seen anything in their bank accounts.
Once signed into law, the relief package will add a total of $484 billion in funding, including $75 billion for hospitals and $25 billion for expanded testing.
