Paycheck Protection Program (PPP): House approves extension

Update: U.S. House approves extension of small business loan program

The U.S. House of Representatives on Wednesday approved an extension of a $660 billion lending program in an effort to help small businesses that have been hit hard by the coronavirus, renewing a lifeline that had just expired.

The Senate approved the extension on Tuesday. It would keep the Paycheck Protection Program (PPP), which expired at midnight Tuesday, operating through 8 August. The bill, which both chambers passed on a voice vote, now goes to President Donald Trump for signing into law.

Many small businesses, just like individuals, have been hit hard by the coronavirus pandemic that swept across the United States. But, just as households were offered support, these companies were provided voluntary aid through the Paycheck Protection Program, where a forgivable loan could be applied for from a pot of $650 billion set aside by the Federal government.

Paycheck Protection Program - reasons to act

Although some were quick to take advantage of the scheme - with estimates that nearly five million loans have been processed - others have still not, but time has not yet run out. You’ll have to act fast now though. The deadline to apply is today, 30 June, with around $100 billion still remaining in the program, and there is no guarantee there will be a equivalent offer available when the next financial package is agreed.

If you were thinking about applying then decided against it, maybe these reasons from Inc.com will change your mind:

Program change - since its introduction, the PPP has been tweaked to support main street businesses as well as their larger counterparts. The Paycheck Protection Program Flexibility Act was signed off early June and extends the amount of time, and broadens the use of the loan. The repayment period has been changed from two to five years while you can now choose to spend as little as 60% rather than the previously stated 75% on payroll expenses. The Flexibility Act also increases the time to use the loan from eight weeks to 24 weeks, helping borrowers to reach full forgiveness.

Lending alternatives - some small businesses were finding problems getting loan approval from a traditional bank but now there is an option to go through a ‘non-traditional’ lender, which could be quicker and more efficient. This includes PayPal, Intuit Quickbooks, Square, and Funding Circle.

Loan forgiveness - The ‘EZ’ application applies to those who take a loan for up to $150,000 and should make life much easier for small businesses. As explained, ‘self-employed borrowers or independent contractors are automatically eligible for the EZ application. Companies with employees can also use the EZ application if they didn't reduce the salaries of anyone earning $100,000 or less by more than 25 percent. Employers need to have maintained their previous staffing levels and the average paid hours of employee work. There's an exception for employers who tried, but were ultimately unable, to rehire candidates for a role and can prove that the employee won't return.’

Employee additions - as economies across the US are opening up, the loan could be a useful way to bring in more staff. This could be immediately, if that is where you are in your schedule, or as part of the planning process.