Paycheck Protection loan applications resume
Dollie Massey jokes with her friend Mehdi Mostafavi, who owns the ladies clothing store Chic Boutique in Whitehaven, on May 4, 2020, just after businesses were allowed to reopen. The federal Paycheck Protection Program was extended Monday, July 6, and small businesses who didn't receive a loan have until Aug. 8 to apply for one. (Patrick Lantrip/Daily Memphian)
Lenders began accepting new applications Monday, July 6, for Paycheck Protection Program (PPP) loans after the program deadline was extended to Aug. 8.
The program expired June 30 but was reopened to give more businesses an opportunity to qualify for forgivable loans designed to maintain payrolls and keep workers employed during the COVID-19 pandemic.
The Small Business Administration has given out 4.8 million PPP loans valued at $521 billion. Congress has authorized up to $670 billion for the program.
Congress authorized the SBA to make PPP loans as part of the Coronavirus Aid, Recovery and Economic Security (CARES) Act passed in March. The original $349 billion was gobbled up in less than two weeks, but applications subsequently slowed down.
Lawmakers increased the authorization and liberalized loan terms in response to concerns businesses needed more flexibility if the money was to help them stay afloat. One of the changes extended to Dec. 31 the deadline for companies to rehire employees who had been laid off.
The loans are open to small businesses, sole proprietors, independent contractors, eligible self-employed individuals, nonprofit and veterans organizations and tribal businesses.
The SBA says PPP loans will be fully forgiven if the money is used for payroll costs, mortgage interest, rent and utilities. At least 60% of the forgiven amount must have been used for payroll. (Original rules specified 75%.)
The amount forgiven is subject to reduction if a company’s full-time headcount decreases or salaries and wages are cut.
The loans carry a 1% interest rate and maturity of 2 years, if issued before June 5, and 5 years, if issued after June 5.
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