The U.S. federal government is taking significant steps to support the U.S. economy, particularly small businesses, who are facing significant disruptions in the wake of COVID-19 and mandated shutdowns across the country.
On Tuesday, April 21st, the Senate reached an agreement with the White House on a new relief bill, which is expected to be voted on by the House in the coming days. The new bill includes a $310 billion replenishment to the Payback Protection Program (PPP) and an additional $60 billion in funds for the Economic Injury Disaster Loan (EIDL) program administered by the U.S. Small Business Administration.
Congress created the PPP last month as part of the $2.2 trillion dollar rescue bill in an attempt to prevent mass layoffs across the country. However, the $350 billion initially allocated to the program ran out in just 14 days amidst extremely high-demand from small businesses. Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders, said that he expects funding to once again be gone in as quickly as a week.
Here are answers to some common questions you might have about the program:
How can I prepare?
According to the SBA, new loan applications aren’t being accepted at this time. However, once the bill is signed into law, the SBA is expected to take applications on a first-come, first-serve basis. Small businesses can prepare by gathering the required information and identifying a participating lender as soon as possible. To find a SBA lender near you, visit this site.
What can the money go towards?
PPP loans must primarily be used for payroll-related expenses, which may make this option more suitable for mid-sized carriers with more employees. At least 75% of the loan proceeds must be used for payroll expenses. To learn more about the requirements, read the Treasury department’s guidelines here.
Where can I find out more information about the program?
The U.S. Treasury department has published this helpful fact sheet with important information including who can apply, how funds can be used, forgiveness terms, and more.
What are some alternatives?
There are both public and private alternative funding sources available for COVID-19 relief. A few highlights include:
- California committed $50 million in financing to California’s IBank for small businesses.
- Florida activated its Emergency Bridge Loan Program with up to $50 million for short-term loans for businesses with 2 to 100 employees in the state.
- Massachusetts started a $10 million Small Business Recovery Loan Fund to provide emergency capital of up to $75,000.
- Facebook launched a grant program offering $100 million in cash grants for eligible businesses.
We also encourage you to visit our Resource Guide for more information on additional services available, including free telemedicine services, free DOT inspections, and more.
Please note none of the above is legal advice or official government positions. The situation is rapidly changing and we encourage you to reach out to your counsel regarding legal advice and check all official sites for the latest updates.