New Funding for Small Business Loans
The Paycheck Protection Program (PPP) was originally part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed by President Trump on March 27, 2020. Originally funded in the amount of $349 billion, the PPP was designed to help small businesses survive these challenging months while still meeting payroll. In fact, to qualify for funding, businesses must make a commitment to retain and continue paying their employees through a specific period. The program is very attractive to businesses like restaurants, which are struggling to meet expenses but do not want to lay off their valued workers.
Eligibility & Terms
All businesses with 500 or fewer employees, which have suffered losses due to the coronavirus, are eligible to apply, including nonprofits and faith-based organizations. Self-employed, independent contractors also qualify for assistance.
PPP loans carry a low 1% interest rate and must be repaid within two (2) years, with a maximum loan amount of $10 million. The best part of the PPP is that if a business follows through on its commitment to retain its employees, the amount of the loan expended on payroll can be forgiven, as well as up to 25 percent of funds used to pay other operating costs such as rent, mortgage or utilities.
If you want to apply, do so immediately, as this money will be exhausted quickly. Some of the new money will be used to fund businesses that were already approved for loans or were being processed when the first round of funding ran out. This second allocation of $310 billion will not last long and it is uncertain if any additional funding will become available.
Although it is administered by the Small Business Administration (SBA), applications for the PPP must be submitted online with an SBA-approved financial institution. If you have an existing business relationship with a bank or credit union—a checking account, line of credit or outstanding loan, for instance—you are strongly encouraged to contact that lender first. There are some banks, including online financial technology companies, that do not require existing business relationships, and smaller community banks tend to be more attentive to small businesses than the large national banks.
Although the PPP has been criticized for funding some large, high-profile corporations, the vast majority of loans approved in the first round of funding went to small, local businesses. And in this second round of loans, additional safeguards ensure that funding goes to businesses that have no other access to capital.
For additional information on the PPP and other SBA coronavirus-related loan programs, visit