Senate Approves 5-Week PPP Extension Prioritized PPP Act Bill Put Forward
Below are two Paycheck Protection Program (PPP) updates we would like to share with you.
Senate Approves 5-Week PPP Extension
Earlier this week, the U.S. House of Representatives joined the Senate in passing a five-week extension of the PPP. The bill now goes to President Donald Trump, who is expected to sign it. The bill would extend the application period until August 8, 2020. The extension is intended to provide more time for small businesses to apply for the approximately $129 billion in PPP funding remaining.
Prioritized PPP Act Bill Put Forward
Businesses hardest hit by the COVID-19 pandemic are still in dire need. For small businesses in hard-hit industries, PPP has not yet provided enough support to retain or rehire employees to a great enough degree, in part because the shutdown has lasted longer than anticipated when PPP was developed, and public health protections have delayed a full reopening of many businesses. That has left employers with the most severe losses, especially smaller-sized employers with limited reserves and access to credit, struggling to survive and recover from the pandemic.
In response, the Prioritized Paycheck Protection Program, or “P4” Loan has been put forward. The bill authorizes new lending under PPP. P4 loans, a subset of PPP, are for borrowers that are self-employed or have 100 or fewer employees that have demonstrated a revenue loss of 50% or more due to the pandemic compared to a relevant period. Borrowers must have fully used an initial PPP loan or be on pace to use the funding.
Specifically, P4 loans:
- May be as large as 2.5-times monthly payroll costs, just as under initial PPP loans, but may not be any larger than $2 million.
- Allow borrowers to apply for forgiveness as early as eight weeks after the loan is disbursed and they have fulfilled payroll requirements, rather make them wait until the earlier of 24 weeks or December 31, which needlessly increases the cost of the loan as interest accrues, tying up money that could be deployed for paychecks.
- Are not available to publicly traded companies.
- Except as otherwise mentioned, are subject to the same terms, conditions, and forgiveness criteria as initial PPP loans.
- Provide lenders a minimum processing fee of $2,500 per loan (PPP and P4) to ensure lenders do not lose money by processing small-dollar loans or cherry pick larger loans.
The bill requires SBA within five days to issue guidance, as required by the CARES Act, which instructs lenders to give priority in loan processing and disbursement to underserved and rural borrowers, including veterans. It also requires SBA to update the PPP loan application to collect demographic information on PPP recipients.
Boeckermann Grafstrom & Mayer (BGM) will monitor for developments and update you accordingly.
If you have any questions, please contact your BGM professional or Cory Parnell at email@example.com. We are proud to advise you and offer you and your business the support it needs. Providing our clients with the highest level of service remains our top priority.
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