A second round of PPP loans, or Paycheck Protection Program loans, could be made available to business owners in the near future. Back in late July a proposal was submitted by Senators Rubio and Collins to extend another round of funding to small and medium size businesses that might still be struggling due to the continued impact that the coronavirus has had on the United States economy.
While many small businesses were able to secure PPP financing, to the tune of hundreds of millions of dollars (around $520M my research shows), the original program for PPP loans was closed on August 8th. So, any business that was not able to take advantage of first round of funding or that may still not additional capital to survive this period is currently out of luck.
That could change assuming Congress can reach an agreement on a second round of PPP loans through what is dubbed the HEALS Act.
Under the original PPP program many larger businesses swooped in and ended up taking up a large chunk of the available funds (the first phase was $350M and was nearly 50% exhausted within the first 48 hours). The new proposal aims to help smaller businesses by including a few covenants. For example, $25 billion dollars of the new funding would be set aside specifically for business with less than 10 employees. That is definitely a small business. Additionally, the new round of funds would target companies with less than 300 employees and require a business to demonstrate a 50% or greater decrease in revenue due to the coronavirus.
One last note. I believe the new proposal carries with it the potential to have 100% of loan proceeds forgiven. Much like the initial PPP loans.
If you are one of the businesses that does not qualify for this new round of funding don’t worry. The Small Business Administration, the SBA, is still making traditional 7(a) loans.
As always, I suggest you talk with your accountant in order to take full advantage of the forgiveness provision.
In Monday’s article I will shift gears a little and be talking about how online lending marketplaces work since I referenced this recently on my Youtube channel.