The Paycheck Protection Program Has Reopened. Here’s What You Need to Do Now

The Paycheck Protection Program officially reopened on April 27, 2020, after Congress authorized an additional $310 billion to finance the program with the “Paycheck Protection Program and Health Care Enhancement Act.” This comes after the first round of funding ran out on April 16. 

What Business Owners Need to Know Now

Business owners impacted by the coronavirus pandemic who have not yet applied for a PPP loan should look to apply through an SBA-accredited lender as soon as possible. Those who already applied should confirm with their lender that they’ll resume loan processing. 

This new round of funding (which includes money for coronavirus disaster loans as well as for hospitals and coronavirus testing) is widely considered an “interim” spending deal, with a more substantial bill to follow. Many expect that more funding is needed to help process the many applications of business owners currently awaiting PPP approval. 

No substantial changes were made to the terms of PPP loans with this bill. This legislation does, however, earmark $60 billion specifically for businesses without access to large financial institutions.

In addition, the SBA announced that they would institute a “pacing” system of processing loan applications from lenders, reducing the number of applications any one lender could submit at a time. Individual lenders will also not be able to submit more than $60 billion in loan volume in this batch of funding. These measures are meant to spread out the dispersal of funds to many businesses across large and small lenders, but it will also slow the pace of PPP loan approval.

In its most recent update of its PPP F.A.Q., the U.S. Treasury noted that businesses must certify that they need a PPP loan to maintain operations. Therefore, “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.” 

The Treasury issued this warning in response to backlash the government and lenders received over public companies obtaining PPP funding through the CARES Act. Although this notice is meant to discourage such applicants, the federal government has not issued formal guidance prioritizing underserved borrowers, or made other changes in official guidelines from the last round of appropriations. 

What Happened During the First Round of PPP Funding?

The first round of PPP funding, through the CARES Act, became available to small businesses through SBA-accredited lenders on April 3, 2020. According to the SBA Paycheck Protection Program Report, lenders processed and approved over 1.6 million loans during that initial funding period of 14 days. 

Nearly three-quarters of those loans were for $150,000 or less, but some businesses were able to secure loans of over $5 million. The average loan size was $206,000. Additionally, while businesses in all 50 states and U.S. territories obtained PPP loans, some states took in more than others. Texas led the nation with over 134,000 PPP loans. New York had just over 81,000 loans approved.

In all, 4,975 lenders—including many smaller, community banks—approved PPP loans before initial funding ran out. 

What Additional Federal Relief Is Available?

The PPP is the biggest government program for small business financial aid, but it’s not the only option. 

Look into whether you may be able to obtain enough financial relief from the Employee Retention Credit, a new fully refundable payroll tax credit that you can take in lieu of the PPP. (Note: This means you cannot apply for a PPP loan if you take this credit.) You can claim that credit immediately by reducing deposits of federal employment taxes, and claiming an advance of remaining credit through IRS Form 7200.

What State and Local Resources Are Available?

Financial relief programs are not limited to the federal government. Your state or local government (city or county) may also offer financial resources to help you through this difficult time. Review our list of state-by-state resources to see what might be available.

Eric Goldschein

Eric Goldschein is the partnerships editor at Fundera with nearly a decade of experience in digital media. He covers entrepreneurship, finance, business lending, marketing, and small business trends. He has written for a number of outlets including Business Insider, HuffPost, Men’s Journal, BigCommerce, Volusion, Square, RetailNext, and Keap. He graduated from the University of Pittsburgh with degrees in history and English writing. Email: eric@fundera.com.
Read more