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Jeff Flock of FOX Business on relief caps for small businesses and how businesses are coping amid the pandemic.
The Paycheck Protection Program, a vital lifeline that has helped keep small businesses afloat during the coronavirus pandemic, will reopen to applicants on Monday, the Trump administration said on Friday.
The bailout fund – which provides forgivable loans to businesses if they maintain their payrolls – will initially only be available to first-time borrowers, with second-time applicants able to apply on Wednesday, according to new guidelines from the Small Business Administration and the Treasury. Department.
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The federal government will also prioritize minority-owned businesses during the first two days of the program by only accepting loan applications from select lenders who focus on underserved communities.
Congress created the $ 670 billion bailout fund earlier this year with the passage of the CARES Act at the end of March. Lawmakers authorized an additional $ 284 billion last month to provide a second round of small business forgivable loans as part of its more comprehensive $ 900 billion COVID relief plan. At least $ 40 billion has been set aside for businesses with 10 or fewer employees and for loans under $ 250,000 in low-income areas.
Only businesses with 300 or fewer employees are eligible for a second loan, which will be capped at $ 2 million. Borrowers must also prove that they saw a 25% reduction in gross receipts in one quarter in 2020 compared to the same quarter in 2019.
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In the first round, companies with less than 500 employees could receive up to $ 10 million.
At the start of the program, he was heavily criticized for giving aid to publicly traded companies that had other means of relieving – even if small businesses languished. The SBA and the Treasury Department, which jointly administered the program, worked to close the loopholes that allowed multi-million dollar companies to tap into the fund, including committing to audit any loans worth greater than $ 2 million.
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Over a period of about four months, the PPP distributed about $ 525 billion in forgivable loans to 5.2 million businesses, saving about 50 million jobs, according to the SBA. The program closed its doors to new applicants at the end of July, with about $ 38 billion remaining in the fund.
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