Small business owners that received forgivable PPP loans can breathe a sigh of relief.
Congress has cleared a bill making needed changes to the federal Paycheck Protection Program, which was designed to keep small businesses afloat during the height of the coronavirus pandemic. The bill is expected to be signed by President Trump imminently.
The changes make it easier for small businesses who have been hurt by the COVID-19 crisis to meet the requirements to have their loans forgiven.
Specifically, the bill extends the period in which proceeds must be spent for loans to be forgiven from eight weeks now to 24 weeks, or until the end of the year, whichever comes first. Small businesses, many of which were ordered closed because of the coronavirus pandemic, have been saying 8 weeks was not long enough to use the funds because many were unable to do any business in that time period.
Another key change: Businesses would also have as long as five years, instead of two, to repay the portion of the loan that is not forgiven. That loan balance will remain at a 1 percent interest rate.
Also, small businesses can now use a greater percentage of proceeds on rent and other approved non-payroll expenses. That’s particularly useful in high rent areas such as South Florida. Before the changes, 75% of the loan amount had to go to payroll; now it is 60%.
YOU CAN STILL APPLY: DEADLINE JUNE 30
It’s not too late to still apply.
Florida SBDC at FIU, the small business development center within FIU’s College of Business, is among the organizations helping small businesses apply for relief. As of last week, SBDC at FIU had helped Miami-Dade and Monroe businesses receive nearly $21 million in relief.
The deadline to apply for the PPP is June 30.
The SBA said on Wednesday that 4.5 million firms had received approvals for loans totaling $510.6 billion. That means about $130 billion remains from the second round of $320 billion that Congress approved for PPP. Round 1 of the PPP — $349 billion – was exhausted in two weeks.
Small businesses can apply through any SBA-approved lender. Small businesses in South Florida have found more success going to smaller community banks.
- More information and details on the PPP is available on SBA’s website here.
- Here is some advice from one of Florida SBDC at FIU‘s consultants on applying.