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Topline
The popular Paycheque Protection Program (PPP), which offers forgivable loans to small businesses to keep them afloat during the pandemic, will reopen today with some changes as the federal government tries to better target the money to the underserved small businesses that need it most. .
Small business administrator Jovita Carranza speaks as she is flanked by US President Donald Trump … [+]
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Highlights
The PPP was revived by the $ 900 billion stimulus package President Trump signed just after Christmas.
The Small Business Administration will limit loans on Monday and Tuesday, the first two days of the program, to community lenders such as CDFIs providing loans to new borrowers.
The restriction follows criticism that companies with strong banking relationships and more resources have been able to access money more easily from the first cycle of the program than their smaller, less-resourced peers.
On Wednesday, the program will open to borrowers for the second time who can demonstrate losses of at least 25% between 2019 and 2020 and who have 300 or fewer employees.
The SBA said major lenders will be able to begin making loans under the updated program “shortly” after Wednesday, Jan.13, but did not specify an exact date.
This new cycle of the PPP will be open until March 31, 2021.
Large number
284 billion dollars. That’s how much money the new stimulus bill has set aside for the current installment of the PPP.
Crucial quote
“These updated guidelines improve PPP’s targeted assistance for small businesses most affected by COVID-19,” Treasury Secretary Steven Mnuchin said in a press release last week. “We are committed to quickly implementing this cycle of PPP to continue supporting American small businesses and their workers.”
Key context
The PPP was put in place by the landmark CARES law in March, which provided an initial amount of $ 350 billion in forgivable loans that small businesses could use to cover salaries and overhead during the pandemic. After a crushing app crash and a chaotic launch period, that $ 350 billion ran out in just two weeks. The program came under harsh criticism after it was revealed that dozens of state-owned companies had received multi-million dollar loans while small businesses without existing bank relationships were shut out altogether. In April, Congress passed a bill that replenished the PPP with an additional $ 310 billion and the program closed in August with $ 135 billion remaining in its coffers. The SBA says the PPP has supported more than 51 million jobs with 5.2 million loans worth $ 525 billion.
Further reading
Finally: Trump signs $ 900 billion relief bill to offset $ 600 stimulus checks and avoid shutdown (Forbes)
How to get a small business loan under the new $ 284 billion P3 program (Washington Post)
Here’s what was inside the massive government PPP data dump (Forbes)
The second round of the paycheck protection program is ‘more frustrating’ than the first time (Forbes)
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