This week, Congress passed a new $484 billion coronavirus aid package that includes $310 billion in additional funding for the Paycheck Protection Program (PPP). The PPP — part of the CARES Act — was designed to help small businesses maintain payroll during this period of uncertainty, so this new round of funding is an important development for small employers.
At the fifth National Small Business Town Hall, held on April 24 by the U.S. Chamber of Commerce and Inc., a panel of experts discussed the replenishment of the PPP program, small lender carve-outs, new guidance on 1099 earners, and more.
During the Town Hall, Inc. editor-at-large Kimberly Weisul spoke with several business leaders, including Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce; Eugene Cornelius, Senior Director for Center for Regional Economics at Milken Institute; Sarah Jennings, Principal of Accounting and Outsourced Solutions and Director of Strategic Initiatives and Community Engagement at Maner Costerisan; Michelle Sourie Robinson, President and CEO of the Michigan Minority Supplier Development Council; and Bridget Wetson, Acting CEO of SCORE.
Here are eight important takeaways (among many) from the panel that can provide guidance for the many American small businesses trying to navigate federal aid programs.
Funds will be replenished for PPP loans soon
Congress has passed $310 billion in new funding for PPP, with the President expected to sign the bill into law shortly. Bradley said this means any companies who have already applied for a PPP loan with banks are still in line to be considered as soon as the Small Business Administration (SBA) has the funds.
If you received a PPP loan and want to return it, you can
Bradley notes that some businesses that did not actually need a PPP loan did, in fact, get one. Some of those businesses have since returned the loan money and any company that wants to return the loan quickly can do so without penalty.
Smaller banks and credit unions are guaranteed some new PPP money
Of the $310 billion this new bill allocates, $60 billion in PPP loans will go to smaller banks and credit unions. Effectively, this means small businesses that only have a relationship with a smaller lender have a better chance of getting a PPP loan in this wave of funding.
“This will help some [small businesses] in underserved communities have a better opportunity to get loans,” Bradley said. “We know those institutions happy to serve a lot of minority or women-owned [businesses]. That will really help.”
The EIDL loan program was replenished as well
The Economic Injury Disaster Loan (EIDL) program from the SBA has also been replenished, with Congress setting aside $50 billion in loans and $10 billion in cash grants. EIDL loans and grants can help with non-payroll expenses such as rent and utilities.
“When you can begin to apply [with the SBA], you should,” Bradley said. “It’s not a guarantee that you’ll get money and remember this program is particularly slow.”
Be careful with tax credits and PPP
Bradley said employers should be careful when taking advantage of new tax credits and PPP simultaneously. If a company accepts a PPP loan, then they are not eligible for the Employee Retention Tax Credit. And if a company opts for Payroll Tax Deferment, they cannot accept PPP loan forgiveness. (And, of course, talk to a financial advisor if you need more clarity.)
How to find alternative lenders to work with
Small businesses that can’t find a lender to work with on PPP have more options now. Robinson suggested looking through SBA-approved lenders and review them all, even non-traditional lenders, to find places to apply. She also mentioned PayPal and Square as good options for small businesses seeking a PPP loan.
Self-employed individuals should not take both PPP and unemployment
In an important note of clarity for 1099 earners and the self-employed, Jennings said that they should not take both a PPP loan and unemployment so they are not penalized. Jennings said you can apply for a PPP loan and take unemployment until you receive the loan.
If your small business hasn’t already applied for PPP, you should immediately
While there has been some uncertainty about the program since money ran out previously, small businesses should still be trying to apply.
“I would apply for the loan,” Bradley said. “The form is not that difficult to fill out. I do think we’ll quickly run through this $310 billion if you look at the loans pending. It’s going to go quickly."
For more resources from the U.S. Chamber of Commerce:
- All of our coronavirus content in one place.
- COVID-19 Vaccine FAQs
- Reopening Guide and Resources
- Main Street Lending Program Guide
- Social Media Toolkit for Reopening for Reopening
- State-by-State Business Reopening Guide, with interactive map
- Paycheck Protection Loan Guide
- Economic Injury Disaster Loan Guide
- Guide to PPP Loan Forgiveness
- Employee Retention Tax Credit Guide
- Coronavirus Response Toolkit for Businesses
- Customizable flyer for businesses to communicate with customers
- Find your local Chamber of Commerce
- The U.S. Chamber of Commerce Foundation's list of small business resources for coronavirus assistance
- CARES Act Guide for Independent Contractors and 1099 Workers
- U.S. Chamber OnDemand - A new streaming service
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