Congress Acts to Extend PPP Deadline to August 8
Fast-tracked Forgiveness Proposed for Smaller PPP Loans
Both houses of Congress this week approved legislation to extend the deadline to apply for a Paycheck Protection Program (PPP) loan to August 8, 2020. President Trump signed this legislation into law on July 4, 2020, re-opening the PPP program to new applications.
The original application deadline for PPP loans was June 30, but when the clock ran out this week some $129 billion in available funds remained in the program’s coffers. Though nearly 5 million loans have been made out of the PPP program, totaling $520 billion, some businesses that have not applied may find the need to do so in the next five weeks as states re-evaluate whether to shut down their economies again as COVID-19 cases spike around the country.
As soon as the deadline extension was passed, discussion arose in Congress about whether separate legislation creating a second round of aid for businesses would be necessary, given the resurgence of COVID-19 this summer after many states reopened their economies on the belief that the pandemic had been contained.
The PPP was created as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in late March. The legislation authorized the Small Business Administration (SBA) to utilize an existing small business lending program to fund forgivable loans of up to $10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities.
The loans are available to small businesses that were in operation on February 15, 2020, with 500 or fewer employees, including select not-for-profits, veterans’ organizations, Tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. Businesses with more than 500 employees in certain industries also can apply for loans.
Automatic forgiveness for some loans considered
In a separate action, members of the Senate Banking Committee this week introduced legislation to fast-track forgiveness of PPP loans of $150,000 or less if the borrower attests to certain facts on a one-page form that is submitted to the PPP lender.
The measure would impact more than 75% of PPP loans, which are for amounts of $150,000 or less.
We will keep you informed of any further developments related to the PPP loan program. In the meantime, if you have any questions about your PPP loan, please contact your Adams Brown advisor.