With funding lapsed, what can businesses do now?
While business relief loan programs including the popular Paycheck Protection Program have run out of federal funding, many organizations are continuing to struggle due to the ongoing COVID-19 crisis.
According to the latest notice from the Small Business Administration, they are unable to accept new applications for assistance due to a lapse in funding. The SBA says that “applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.”
While the lack of funding is bad news, many in Congress hope to appropriate additional funding so that more businesses can receive assistance.
The Missouri Chamber of Commerce and Industry will closely follow the actions of Congress and work to inform the Missouri business community about the availability of additional funds.
In the meantime, there are several things businesses should keep in mind as federal lawmakers and the Trump administration consider their next steps.
- If more funding is provided, find a lender here: https://www.sba.gov/paycheckprotection/find
- Most small businesses with fewer than 500 employees will qualify. Sole proprietors, independent contractors and some self-employed individual will qualify. If more funding is provided, watch for new application deadlines. Learn more about how these resources can be accessed by independent contractors: https://www.uschamber.com/report/independent-contractors-guide-cares-act-relief
- Borrowers will calculate how much they are eligible for by averaging out their last 12 months of payroll and multiplying that amount by 2.5. There is a $10 million cap for each business. Be prepared to provide documentation demonstrating payroll you actually paid out.
- Seasonal employers will use a 12-week period beginning either February 15, 2019 or March 1, 2019, and multiply that average by 2.5.
- PPP loans can be 100% forgivable if used for allowed purposes – payroll, health care benefits, interest on mortgage debt, rent, and utilities. Not more than 25% of the loan forgiveness can be attributed to non-payroll costs. Businesses must also maintain employee and compensation levels for the eight weeks following disbursement of the loan.
- Here is the PPP application you should review now in case there is another round of funding made available. Be prepared to have this application ready to submit should more funding become available: https://www.sba.gov/sites/default/files/2020-04/PPP%20Borrower%20Application%20Form.pdf