• Advocacy Team

SBA's Paycheck Protection Program: What you should know

Updated: Jun 8, 2020

6/5/20 Notice: PPP Flexibility Act Overview:

On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act (H.R. 7010) into law. The bill makes several significant changes to the PPP.

Here's an overview of the changes:

  • Increases when PPP funds must be spent to 24 weeks after loan origination, adding 16 weeks to original PPP eight-week period. Borrowers can also instead elect for an 8-week covered period of their choice ending prior to December 31, 2020.

  • Increases limit of covered non-payroll expenses to 40% of total loan expenditures if borrower seeks maximum loan forgiveness.

  • Loan forgiveness will not be reduced due to a lower numbers of FTEs if an employer 1) is unable to rehire a previous employees, 20 shows an inability to hire "similarly qualified employees" before December 31, 2020, or 3) shows an inability to return to the "same level of business activity" as prior to February 15, 2020 due to new standards for sanitation, social distancing, or any other safety requirements.

  • Loan payments deferred until forgiven amount is remitted to lender. New PPP loans will have 5-year loan periods. Nothing will "prohibit" lenders and borrowers from "mutually agreeing to modify the maturity terms of a covered loan" for existing PPP loans.

  • PPP borrowers will have full access to payroll tax deferment.

You can check back here for updates on this legislation.

Paycheck Protection Program and PPP Expansion: What You Should Know

On Friday, April 24, 2020, President Trump signed the PPP expansion into law. The bill did the following:

  • Amended CARES Act by increasing the Paycheck Protection Program appropriations from $349 billion to $659 billion

  • Amended the EIDL Grants by increasing appropriations from $10 billion to $20 billion

  • Made agricultural enterprises with no more than 500 employees eligible for the EIDL program

In addition, the bill includes a $60 billion set-aside for Insured Depository Institutions, Credit Unions, and Community Financial Institutions and additional health and human services emergency appropriations for coronavirus response.

The SBA's Paycheck Protection Program (PPP) will provide cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during this emergency.

Key Information

Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. Applicants are encouraged to apply as quickly as possible because there is a funding cap.

You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.

Who is eligible

  • All businesses - including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors - with 500 or fewer employees can apply.

  • Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for the industries.

What do I need to apply?

Lenders will need to verify that a borrower was in operation on February 15, 2020. They will also need to verify that a borrower had employees for whom the borrower paid salaries and payroll taxes and the dollar amount of average monthly payroll costs.

You can check out the latest PPP application information on several lender websites HERE

Additional Resources

Program Overview

For Borrowers

For Lenders

Program Rules

Program Reports

Please note, this article is provided for information purposes only. All information is preliminary and is subject to change. Businesses should consult with their accountants, attorneys, bankers, or local SBA Small Businesses Development Center for guidance.

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