Congress Passes Updates to COVID-19 Funds; More Money Available for Business Loans
On Thursday, April 23rd, the House of Representatives passed a $480 billion funding bill that aims to close gaps in funding provided by earlier loans through the Paycheck Protection Program (“PPP”). The funding bill is expected to be signed into law by President Trump today, April 24th.
While many businesses were able to access the PPP loans, the original $350 billion fund ran out quickly, leaving many business owners in a tough financial position. The new bill allocates $310 billion to fund new PPP loans, $60 billion of which is reserved for community-based lenders and smaller banks. It also provides $60 billion for additional Economic Injury Disaster Loans (“EIDL”), another type of small business loan available during emergencies.
PPP Loan Terms
- Employers can receive a loan for the lesser of 2.5 times their average monthly payroll costs (salaries, wages, commissions, vacation benefits, and some taxes) for 2019, or $10 million.
- Companies must also certify that the loan is necessary and that the company does not have other sources of funding.
- PPP loans have a maximum term of 10 years and a maximum interest rate of 4%.
- PPP loans can be used for salaries, employee benefits, rent, utilities, and interest on a mortgage or other debts.
- Any money spent on payroll, mortgage interest, rent, and utilities during the first eight weeks of the loan can be forgiven.
- Payments of interest and principal on the loans may be deferred for six months to one year after the forgiveness period.
Although the Small Business Administration (“SBA”) is not currently accepting applications, we recommend you contact your bank to commence the application process to help ensure that the loan application and all required documentation is prepared to be submitted when the SBA begins accepting applications.
EIDLs are available to small businesses and include a $10,000 advance payment to businesses to bridge the gap between submitting an application and receiving a full loan payout. Even if you applied for a PPP loan during the original funding process, or plan to apply now, you may still be eligible for an EIDL through the SBA. The funds from a PPP loan and an EIDL must be used for different operating costs and cannot be comingled in any way.
For more information on PPP and EIDL loans, or to discuss which of these stimulus loans may be best for your business contact your attorneys at Rock Fusco & Connelly, LLC. We can be reached via email at firstname.lastname@example.org, or by telephone at (312) 494-1000.