Updated June 16, 2020
The Paycheck Protection Program (PPP) has been a much-needed lifeline for small businesses struggling to stay afloat during the coronavirus pandemic. However, Congress has been hearing a chorus of complaints from business owners that the rules around loan forgiveness are too rigid, and that these rules have hampered their efforts to keep their doors open and retain employees.
Congress responded last week by passing the Paycheck Protection Program Flexibility Act of 2020. This bill, which has now been signed into law, gives small business owners more flexibility on how and when to spend their loan proceeds without jeopardizing forgiveness of the loan (or a substantial portion of it).
What does this mean for you? If you looked at the PPP a couple of months ago, and decided not to apply for a loan, you may want to take a look at the new rules and reconsider. The Small Business Administration still has substantial funding available for loans. The deadline for applications is June 30, 2020, but the changes now allow loan proceeds to be used until Dec. 31, 2020.
If you already have a PPP loan, you should re-think your spending plan based on the new rules. You probably have significantly more flexibility now than you did under the old rules. The SBA will release more guidance on the changes soon.
Here are the provisions of the Paycheck Protection Program Flexibility Act that are likely to impact you the most:
If you have not applied for a Paycheck Protection Program loan, and these changes would help your business, you should talk to your bank today. The deadline for new applications is June 30, 2020. If you do not have a relationship with an SBA-qualified lender, we can help. Click here to get more details: https://www.ncr.com/coronavirus/nymbus-smb-relief.
If your business has more than 500 employees and you are not eligible for a Paycheck Protection Program loan through the Small Business Administration, help may soon be on the way through the “Main Street Lending Program.” The Federal Reserve is expected to initiate lending through this program soon to businesses with no more than 15,000 employees and $5 billion in annual revenues. The minimum loan size will be $250,000, and the maximum loan term will be five years. It is important to note that these will not be forgivable loans. However, for medium-sized businesses that have struggled to find affordable credit in the financial markets, the Main Street Lending Program may be a valuable option. Check the Federal Reserve’s website for updates on the upcoming launch of this program: