May 8 Update – $100B still available in PPP, applications slowing down
When the second round of the Paycheck Protection Program (PPP) began on April 27, many experts feared that it would run out of money again within a week. This view seemed to be confirmed as the load of applications that had been building up during the interim surged through the system. However, nearly two weeks later, the PPP still has over 40% of its funds untapped, or a little over $100 billion.
The applications have dried up and less and less money is being loaned out. There are many reasons for this, the initial panic over the economic impact of COVID-19 has cooled and a tighter set of rules set on the second allocation of PPP money has led larger companies to look elsewhere for relief. But one of the most significant reasons for this is the 75% rule, the rule that states that 75% of the loan must be spent on payroll to qualify for loan forgiveness.
For many smaller companies many more expenses come from factors such as rent, which makes the PPP loan basically the same as any other loan. The rule stating that the forgiveness period only covers 8 weeks after the loan origination has also led many to reconsider applying, since the economy is in varying states of shutdown across the nation. These problems have been recognized and lawmakers in Congress and state officials are lobbying the Treasury Department to change them, but for now, the PPP has a lot of money with few applicants.
If you have not yet applied for a loan because you didn’t think you would make it through the mountain of applications then this is a golden opportunity. With the activity in the PPP slowing down for the moment this is the perfect time to submit your application. Using the SBA tool linked below, you can find a local bank or lending institutions near you to apply. We strongly encourage you to take this opportunity while it lasts.
SBA tool to find approved lenders in your zip code: https://www.sba.gov/
Bipartisan House letters ask Hill leaders, SBA and Treasury to relax PPP and EIDL restrictions because of problems restaurants are facing. @RepBradWenstrup leads the requests pic.twitter.com/3FgMC2H0Jw— Zachary Warmbrodt (@Zachary) May 8, 2020
Attorneys general for 23 states plus DC have several of their own recommendations for overhauling PPP:— Zachary Warmbrodt (@Zachary) May 8, 2020
-- More leeway in how businesses use loan proceeds
-- Rules ensuring that lenders cannot favor certain categories of applicants over others https://t.co/e0GuKzJoSk
May 5 Update – DOJ announces initial PPP fraud charges; calls for SBA to loosen loan requirements continue
The Department of Justice has announced the first fraud charges in relation to the Paycheck Protection Program, and there are sure to be more in the weeks and months ahead. Whether these charges will affect the political wrangling behind further funding is yet to be determined. The National Federation of Independent Businesses has released a list of 8 changes to the PPP that they have submitted to the SBA. They request a general loosening of the requirements around the loans, such as an elimination of the 75% payroll requirement, pushing back the first loan repayments from 6 months to 1 year, and push back the overall deadline for loan repayment from 2 years to 5 years. As I wrote yesterday, Secretary Mnuchin has pushed back against any changes to the current PPP loan system.
DoJ just announced its first Paycheck Protection Program fraud charges https://t.co/LlFK8YfYNT— Zachary Warmbrodt (@Zachary) May 5, 2020
National Federation of Independent Business is asking SBA to ease PPP restrictions and to release guidance on loan forgiveness pic.twitter.com/hCb0ZXixI8— Zachary Warmbrodt (@Zachary) May 4, 2020
May 4 Update – $100B remains available, unlikely new funds will be allocated to program; Mnuchin stands firm on loan terms
After several days of unexplained silence, the SBA yesterday announced that there have been 2.2 million loans to small businesses and nonprofits totaling $175 billion. This means that there is now roughly $100 billion left in the PPP coffers yet to be loaned out. There continues to be little movement in Congress to add more money to this fund, so it is possible that this is the last money that will come out of the PPP. Under pressure from certain groups to ease the terms of the PPP loans to provide more flexibility for employers, Treasury Secretary Steve Mnuchin has refused to change the terms, citing the fact that in some cases the terms are written into the law and that he does not have the authority to change them. “This is the way the program was designed by Congress,” Mnuchin said. “We think it has the right intent to get the money to employees. So I don’t have the flexibility to change that.” Some of the loan applicants are now receiving their money, so if you were approved for a loan, it could be on its way soon.
New from SBA and Treasury: “Since Round 2 of PPP loan processing began on April 27, 2.2 million loans have been made to small businesses which surpasses the number of all loans made in PPP Round 1. The total value of these 2.2 million loans is over $175 billion.”— Zachary Warmbrodt (@Zachary) May 3, 2020
Treasury Secretary Steven Mnuchin signaled he will not ease restrictions on how small businesses must use emergency government-backed loans issued to prevent layoffs, amid a lobbying push aimed at giving employers more flexibility https://t.co/6Qt6tlNbbm— POLITICO (@politico) May 4, 2020
Many applicants received their funding this morning. More in the next few days. Customers Bank has every incentive to get the funds into your accounts as quickly as possible and no incentive to delay.— Customers Bank (@CustomersBank) May 4, 2020
May 1 Update – PPP still active, amount of funding remaining is unclear; Inspector General investigating claims of fraud
Whenever the government starts handing out billions of dollars as fast as possible, there are lots of allegations of fraud many of which will turn out to be true. The PPP is no exception to this and the Inspector General of the SBA has written to concerned Senators assuring them that he is compiling and investigating these allegations, and that a report on the subject will be published on May 8th. Meanwhile the PPP continues, with banks still reporting that the loan applications are going through. It is unclear how much money is left to loan out and there might still be enough for a last-minute application. There appear to be no efforts underway in Congress to prevent the PPP from running out of money, so this may be the last chance you have to access it.
DoJ statement: “The Criminal Division’s Fraud Section is working with our law enforcement partners, the Small Business Administration, and banks processing loans under the Paycheck Protection Program to identify outliers in the data." 1/2— Zachary Warmbrodt (@Zachary) May 1, 2020
SBA IG tells Warren and Velázquez that it will publish a report on PPP by May 8 pic.twitter.com/Atdgxgp60H— Zachary Warmbrodt (@Zachary) May 1, 2020
April 30 Update – $90B approved so far in second round of PPP, money reaching smaller nonprofits & businesses through smaller lenders
As of yesterday the second round of the PPP has approved almost $90 billion to almost 1 million applicants. Already it is clear that this money is being distributed to smaller businesses and nonprofits more than the first time, as the average size of a loan had been cut in half from over $200,000 to $94,000. This has been accomplished by shifting focus from large lending institutions like big banks to smaller lenders, with 70 percent of the total loans amount being processed through lenders with less than $50 billion in assets.
PPP Round 2 numbers as of 5 p.m., from the SBA:— Zachary Warmbrodt (@Zachary) April 29, 2020
Number of approved loans: 960,000+
$ volume of approved loans: Nearly $90B+
Number of lenders: 5,300+
The average loan size for PPP Round 2 is about $94,000, down from about $207,000 in Round 1— Zachary Warmbrodt (@Zachary) April 29, 2020
April 28 Update – $52B in PPP loans approved on re-opening day, new funds expected to run out by end of week
This is the second day of the second round of PPP loans. Yesterday alone the PPP approved $52 billion worth in loans to over 475,000 small businesses and nonprofits. $3 billion are being approved per hour, and this is with many complaining of technical difficulties jamming up the process. Anger at how many large companies were able to access PPP funding the first time around has led to even more regulations to prevent abuse, with the Treasury Secretary Steve Mnuchin announcing that for every loan given out over $2 million, a “full audit” will be done before any loan forgiveness is given to ensure that the borrower did not misrepresent their finances. If the current rate of burn continues, the PPP will once again run out of money by the end of the week, and it seems likely that the program will once again go on hiatus as the House has cancelled plans to meet next week precluding any additional funding.
From SBA, new PPP numbers as of 1 p.m.:— Zachary Warmbrodt (@Zachary) April 28, 2020
Number of approved loans: 475,000+
$ volume of approved loans: $52 billion+
Number of lenders: 5,100+
Industry sources believe the SBA is processing about $3 billion in PPP loans per hour. The SBA declined to confirm that figure.— Zachary Warmbrodt (@Zachary) April 28, 2020
Secty Mnuchin on @CNBC on PPP loans to big companies: "It's the borrowers who have criminal liability if they made this certification (of economic need) and it's not true...We're going to do a full audit of every loan over $2m. This was a program designed for small businesses."— Steve Liesman (@steveliesman) April 28, 2020
April 27 Update – PPP reopens, new rules set loan caps to make lending process fairer; $2B returned by large companies after public pressure
The second round of the Payroll Protection Program opened this morning. New rules set in place have set a cap on how many loans can be processed by each bank or lender per hour, that number being 350. This is clearly meant to try to check the flood of new applications added to those that have been in stasis since the program ran out of money, and try to establish a more systematic approach. Several large companies including the NBA’s Los Angeles Lakers have returned funds they received during the first run of the program, as they have been under significant public pressure. The total amount the PPP has received back from the first rollout is about $2 billion dollars, and this money is being added to the new $310 billion apportioned by Congress. Politicians on both sides of the aisle are now saying that even this second round of funding will not be enough to meet demand, though it is still uncertain as to whether there will be any more money coming or how much. There have been reports of technical difficulties in accessing the PPP loans today, doubtlessly because of the increased load mentioned earlier, but keep trying and you will probably eventually get through.
In addition to capping PPP loans at $60 billion per bank, the SBA has told lenders it will limit applications to 350 loans per bank per hour— Zachary Warmbrodt (@Zachary) April 27, 2020
Lakers got money from loan program, returned it https://t.co/9cF63FBVGT— Silla Brush (@sabrush) April 27, 2020
More than $2 billion of the first round of #PaycheckProtectionProgram funding was either declined or returned and will be made available during the current application period.— Jovita Carranza, SBA (@SBAJovita) April 27, 2020
#PPP restarts tomorrow at 10:30EST— Marco Rubio (@marcorubio) April 27, 2020
This is good news because this additional $322B will help countless #SmallBusinesses & will save millions of jobs
The $672B committed to #PPP is an extraordinary amount,but the hard truth is that the extraordinary demand is even higher
“This second round of funding for PPP has been set up to fail. No one realistically thinks that there is enough money to meet the demand.” https://t.co/dhTllcWsB9— Zachary Warmbrodt (@Zachary) April 27, 2020
April 24 Update – President Trump signs latest PPP funding bill, program expected to reopen Monday
President Trump signed the latest Coronavirus relief bill, which includes $310 billion in money for the Payroll Protection Program. This means that the relief loans for small businesses and nonprofits will start up again soon with the program probably restarting Monday. Because of the controversy about how some less-than-small businesses took millions under the PPP, new rules have been put in place barring hedge funds and private equity firms from accessing the money, even if they have less than 500 employees. However, this has not satisfied all and a probe is now being opened into how the PPP distributed its money by the Inspector General of the Small Business Administration (SBA).
This should not affect your ability to apply for and receive PPP funds when they open up again. But many experts are concerned that even the $310 billion additional the PPP has been given will not be enough, with many predicting that the money could run out again in a matter of days. If you have not already received money under the PPP, this could very well be your last chance so make sure to contact your bank or find a lender approved by the SBA immediately to get a loan.
To the workers and small businesses who need relief through the Paycheck Protection Program, President @realDonaldTrump is fighting for you.— The White House (@WhiteHouse) April 24, 2020
Today, his signature will right the wrongs of politicians who once again put their needs before your own.
Rubio says the Paycheck Protection Program will likely restart Monday https://t.co/CvcVINEZGC— Zachary Warmbrodt (@Zachary) April 24, 2020
The SBA in a new PPP rule says hedge funds and private equity firms are ineligible for small business rescue loans https://t.co/zu9Ybcj5Xc— Zachary Warmbrodt (@Zachary) April 24, 2020
SBA IG confirms receiving PPP investigation requests from Warren/Velázquez and Schumer/Cardin/Brown. Says they're within the scope of its oversight plans https://t.co/MgKer4pkJS— Zachary Warmbrodt (@Zachary) April 24, 2020
Banks still expect the new round of PPP money to be exhausted within a few days. The daily burn rate could be higher than it was before https://t.co/qjBGOkSeD7— Zachary Warmbrodt (@Zachary) April 24, 2020
April 23 Update – House expected to approve PPP funding today, President to sign, Guidance for Coronavirus Relief Fund released
The House is taking special precautions today while they vote on the extra money for the PPP. Representatives will be let into the House chambers in several groups in staggered order to lessen the chance of COVID-19 infection. The bill is expected to pass the House today and possibly be signed by the President tonight. The PPP could open up again as soon as tomorrow, though bankers and lenders are still uncertain exactly when. The new money for the PPP will amount to $310 billion dollars and raise the total amount given to the program to over $600 billion.
Controversies have arisen as it is revealed that many larger companies accessed the first stage of the PPP, siphoning off tens of millions of dollars and depriving smaller businesses and nonprofits of much-needed funds. To prevent this from happening again, the Trump administration is warning large publicly-traded companies to not take PPP money, and that those that already took the money the first time are to give it back by May 7 or face penalties.
In other CARES Act related news, guidance for the Coronavirus Relief Fund has just been released. This fund is $150 billion that is being distributed to states, territories, and other localities to lessen the impact of COVID-19. If your nonprofit is working to help those affected by COVID-19 you could be eligible for those funds. You will need to check with your state and local governments for more detailed information on how those funds are being used.
The House will be voting tomorrow on the $484B relief bill in up to nine staggered groups based on alphabetical order. They’re otherwise being asked to stay in their offices.— Caitlin Emma (@caitlinzemma) April 22, 2020
The SBA isn't saying how quickly PPP applications will be accepted once the new funding bill becomes law. The CEO of the American Bankers Association just told the group's members he expects the SBA's "E-Tran" system to be reopened as early as Friday morning— Zachary Warmbrodt (@Zachary) April 23, 2020
Bankers and lobbyists I've spoken with today have said they're in the dark about exactly when SBA will start taking PPP applications again.— Zachary Warmbrodt (@Zachary) April 23, 2020
Today @Treasury will clarify that it’s unlikely a public company with substantial market value & access to capital markets will be able to make required #PPP certification in good faith. They have until 7 May to repay a #PPPloan without penalty.— Marco Rubio (@marcorubio) April 23, 2020
April 22 Update – Senate approves additional funding for PPP, House to vote on measure Thursday
Last night the Senate passed a bill that gave an additional $310 billion to the PPP. The House will probably vote tomorrow and all indications are that it will pass. The funding should become available sometime this weekend. However, this money is projected to run out extremely quickly, with some experts claiming the $310 billion could run out in as little as three days. If the partisan bickering over the first replenishing of the fund that everyone agreed upon held it up for 2 weeks, the next replenishing might take much longer, especially as the total amount of money invested into the program climbs. Make sure if you didn’t get any of the PPP money the first time you are prepared to quickly access it now because it may be another long wait when the new funds are depleted.
"The $310B for #PPP will run out in just 3 days," says @BrockBlake, CEO of online loan facilitator @Lendio. He says $850B total might be needed & wants MORE lenders added to the scheme. #SmallBusiness #Covid19 pic.twitter.com/TCkH1BkQVt— Julia Chatterley (@jchatterleyCNN) April 22, 2020
The new PPP funding that the Senate just passed might only last a matter of days once it becomes law https://t.co/qjBGOkSeD7— Zachary Warmbrodt (@Zachary) April 21, 2020
April 21 Update – Congress expected to reach deal for more PPP funding; SBA releases tool to help small businesses find approved lenders
Congress has appeared to reach a deal regarding PPP funding. This deal would give the PPP an extra $310 billion, in addition to $60 billion for other small business grants and loans, $75 billion for hospitals, and $25 billion for COVID-19 testing. If this deal passes it will end a 2 week long impasse over additional funding for the PPP, though as of this writing it still has not passed either the House or the Senate. The Senate is scheduled to vote on this compromise later today, but the House is not supposed to meet until Thursday, which means that the PPP will not open up again until the weekend, assuming nothing else holds up this bill. If you have a relationship with a bank already, have your application ready, and submit it as soon as possible. If you do not have a relationship with a bank, then you can turn to a digital option such as PayPal or Square. Check back here for further updates to the progress of the bill.
Ok ... NOW Coronavirus deal is done. But all 100 senators are now being asked for consent to pass bill at 4 p.m.— Burgess Everett (@burgessev) April 21, 2020
According to summary, it has
-$310B+ for PPP
- $60B for small biz grants and loans
- $75b for hospitals
- $25b for testinghttps://t.co/5pKghvrb3N@heatherscope
Sources tell us stimulus vote still expected for 4pm on Senate side, though may be later. House likely Thursday (takes time to get folks in town), but it should be law Thursday night/Friday morning. PPP loans may begin getting distributed as early as this weekend via @LJMoynihan— Charles Gasparino (@CGasparino) April 21, 2020
April 20 Update: Records show initial PPP funding distributed to larger businesses, no progress on additional program funding
There has been no apparent progress in Congress to allocate more funds for the Payroll Protection Program. The Senate is meeting again tomorrow, but there is no word on whether there is any chance the deadlock will break. Meanwhile, as we learn more about how the initial PPP funds were distributed, certain larger restaurant chains have come under fire for accepting large loans. The most prominent of these is Shake Shack, which applied for and received 10 million dollars through the PPP. Under intense public pressure they have given the money back to the SBA, but this is just an example of how a lot of the money went to less-than-small businesses, and will amplify calls to more precisely define who can get PPP loans.
Shake Shack returning $10 million government loan meant for small businesses https://t.co/GcTYUSKacL— Alyssa Milano (@Alyssa_Milano) April 20, 2020
April 17 Update – Congress at impasse on additional PPP funding
Congress is still at an impasse. As more statistics come out on how the initial PPP money was used, questions are being raised as to how much of a “small business” loan this actually was. There were 1.6 million loans approved, but 4 percent of the approved PPP loans were for 1 million dollars or more. Those loans in total, about 152.4 billion, represented 44.5 percent of all the money approved under the program. This shows that a large portion of the money went to businesses on the larger end who perhaps did not need it as desperately as others. So added to the already intractable situation in Congress right now, there are calls to set aside a portion of whatever new money is given to the PPP for small lenders, who are more likely to loan to smaller businesses and nonprofits. The bigger banks of course oppose this. Experts in the business also say that by the end of the PPP small businesses will need over 1 trillion dollars, a figure that far surpasses the initial 350 billion and the proposed 250 billion. Some banks and lenders are still accepting applications in the event that more money is provided, so stay in touch with your bank.
Look at data not press release.— Aaron Klein (@Aarondklein) April 17, 2020
4% of the loans made accounted for 44.5% of the dollars spent.
Median loan (by dollar size) was nearly $1 million.
This was not to the smallest businesses.https://t.co/aFSwGHMDT1 https://t.co/zSbhUhef21
Several banks signed a new letter urging Congress to boost PPP funding. They just don’t want part of it set aside exclusively for small lenders pic.twitter.com/4qbe7Rqto3— Zachary Warmbrodt (@Zachary) April 17, 2020
"We think at the end of the day we're going to need upwards of $1 trillion in order to satisfy the demand of America's small businesses,” said Consumer Bankers Association President and CEO Richard Hunt. https://t.co/vW39nckL8P— Caitlin Emma (@caitlinzemma) April 16, 2020
April 16 Update – PPP closed, no longer taking applications due to lack of funds
The PPP is now closed for lack of funds. The SBA has announced that “The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time.” We now have to wait and see whether Congress will appropriate more funds for the program.
Currently, Republican and Democratic leadership are locked in a battle not over how much funding should be given to the PPP, but over whether any additional funds will be given to other initiatives along with new PPP funding. Republicans have laid out a plan to give an additional 250 billion dollars to the PPP, while Democrats are insisting that another 250 billion be attached to that for local governments and hospitals. This impasse has existed since last week, when Republicans tried to pass the additional PPP funding but were blocked. Now when the PPP reopens will be whenever a deal is reached, anywhere from later today to next month.
Other CARES Act programs, such as the EIDL program also have serious funding needs. However, you can still submit applications at some banks, for whenever Congress opens the funding tap. Hopefully Congress can get its act together quickly, because many small businesses and nonprofits still desperately need money.
The etran music has stopped for Round #1 of #PPP funding. The $349 billion appropriated has been exhausted as of 10:05am. See you for Round #2. Still tremendous need and demand from small businesses around the country. #paycheckprotectionprogram— E. Dawn Thompson (@edawnthompson) April 16, 2020
Wells Fargo on PPP: "We will continue to prepare applications in our existing pipeline from small and mid-size businesses and will submit them to the SBA when funds become available." https://t.co/Pz0WmzHB3A— Zachary Warmbrodt (@Zachary) April 16, 2020
In addition to PPP funding, @SenatorCardin says SBA's EIDL program has been oversubscribed for a week and "needs cash now."— Zachary Warmbrodt (@Zachary) April 16, 2020
April 15 Update – Insufficient funding & unequal access during program rollout means some PPP applicants may not receive desired loans
With partisan divides jamming the works for any additional funds for the PPP for the time being, and the program quickly running out of money, I think it is worth examining some of the effects this funding crunch is having on the PPP. The most obvious problem is that with a limited amount of money there is a mad scramble for the few remaining funds, and many who have their applications in now may not even get any money. The PPP is funneled through private institutions, banks and lenders, and even at the beginning of the program, there was a distinct favoritism shown by the banks to previously established customers. This was both because it was harder to sign new people up for a loan, and because the banks would want to keep their more permanent customers open. This would not be so much of a problem if there was enough money, but the money is dwindling and the banks now have to choose who gets the last loans, until Congress approves more money.
Problem with running PPP thru the banks is they can potentially use it as a quasi-bailout (helping most indebted customers) and/or helping their best customers. Unclear if the government interest is served best putting either type at the front of the line.1/— Steve Liesman (@steveliesman) April 15, 2020
April 14 Update – $240 billion loans approved; PayPal, Square, and others approved to handle smaller loan applications to speed up process; uncertainty over additional funding continues
The PPP has now approved 240 billion dollars worth of loans, though there are no official numbers on how much of that sum has been disbursed, or actually made it into the accounts of the applicants.
A very big piece of news is that several Fintechs have now been approved to receive applications for loans. These fintechs, companies like PayPal, Intuit, and Square, will be key to help optimize the application process. Up to this point, banks have been flooded with small dollar applications, which make up the majority of total applications, but very little of the total money approved. Fintechs will be able to take many of the smaller applicants, which in turn means the bigger institutions will be able to focus on larger loans. This is a key step that should have been implemented before now, but with the time crunch from when the PPP loans were approved by Congress (only two and a half weeks ago) jammed up the process.
The process continues to streamline but the biggest concern is still funding, with congressional leaders still haggling over additional funding, while the current funding pool has been reduced to about $100 billion.
#PPPloans numbers as of this morning:— Kate Rogers (@katerogers) April 14, 2020
-More than 1M loans have been given SBA eTran numbers
- Loans valued at more than $240B
-4600+ Lenders on the platform
(Still no total disbursement info)
1/ Yesterday, I posted about my concern that many small businesses are currently at a disadvantage. That spurred some great questions about why FinTech lenders are so important. https://t.co/kd4ufr8XtQ— Brock Blake (@BrockBlake) April 10, 2020
April 13 Update – PPP Allocates Half of Initial Funds, Additional Lenders Approved to Offer SBA Loans
The Paycheck Protection Program (PPP) has now lent over half of its initial allocation to small businesses and nonprofits. As of yesterday 205 billion of the 350 billion dollar pool has been approved for loans, although there is a delay between when the loan is approved and when the money is received. This has corresponded with the rise of approved lenders for PPP loans, with the number rising to 4,400 banks and other lenders from only 1,700 a week ago. This is indicative of the program shaking off it’s rough start and making it quicker and easier to get a loan. But the elephant in the room is of course the funding.
The PPP is supposed to last through June 30, but here we are less than halfway through April and the money is over half gone. Everyone in Congress agrees that more money is needed quickly, but seem to lack any urgency to actually get any money into the program, and some are using it as a political football to try to maneuver other projects through.
Long story short, at this time it appears that the money will be exhausted before Congress will add more, at which point there will be a political scrum over who should get the blame, and then the money that everyone already agrees the PPP needs will be given. Unfortunately that could take a week or more, but it seems likely that more money will eventually make it into the program, so keep in touch with your bank and make sure your application is in.
April 10 Update – Funding Deadlock Continues, Frustrations Mount Over Lack of SBA Approved Lenders
The deadlock for additional funding for the PPP continues, with both sides agreeing that the 250 billion is needed but disagreeing on whether any money for other projects will be added to that. The situation seems unlikely to change soon, so let’s dive into more detail on the controversies with how the current funds are being allocated.
The main problem with the PPP as it stands is the lack of SBA approved lenders. Before this crisis only certain banks had approval to disseminate SBA loans, and since the PPP is under the jurisdiction of the SBA, these approvals are necessary before a bank can lend any PPP money. These approvals take time to obtain and have many hoops a bank needs to jump through. Therefore, many banks do not have these approvals and so are unable to help their customers with the PPP. Meanwhile, the banks that do have these approvals are focusing on their existing customer base for reasons outlined in yesterday’s update, and only after those customers have been served are they moving on to the larger mass of nonprofit and small business applicants. This has created a scenario where if you were affiliated with the “wrong” bank (one without SBA loan approvals) then you are effectively locked out of the program. Two days ago the SBA released a non-SBA lender application, it remains to be seen if this will fix the problems.
11/ ..and let’s bring everything we have to this good fight!— Brock Blake (@BrockBlake) April 9, 2020
First step? non-sba lender application released 4/8!
Next step? Accelerate approval.
April 9 Update – Decision Delayed on Additional PPP Funds
Predictably, partisan strife has again caused the delay of funding for the PPP. Earlier today, Senate Majority Leader Mitch McConnell tried to pass a bill allocating an additional 250 billion dollars to the Payroll Protection Program after the program’s hectic rollout last weekend demonstrated that the 350 billion initially allocated would quickly run out. However, the Senate is not due to meet until the 20th, and only a few senators were in D.C. So Senator McConnell tried to pass the funding by unanimous consent, which means that a quorum of senators would not be necessary to pass the bill. The catch is that if any senator present at these proceedings objects that a quorum is not present, then no action can be taken. Democratic senators present objected to the bill, as they have a seperate plan to allocate the 250 billion for the PPP in addition to another 250 billion for other relief programs. The Democratic senators presented this plan, but this was in turn stopped by McConnell. To summarize, everyone wants the extra money for the PPP, but disagree on what, if anything, should be added to that. So unless some compromise can be reached, the PPP will have to make do with the initial 350 billion.
One big issue that has arisen with how the banks are allocating the money for the PPP program is that many are only dealing with existing customers of their bank. This has led the banks to come under heavy criticism for not allowing equal accessibility. The banks claim that the reason for this is the anti-money laundering rules of the Financial Crimes Enforcement Network, or Fincen. For every new lending customer a bank has, there is additional paperwork and hoops to jump through that make it a lot harder to lend money. The flood of new applicants for loans has overwhelmed the systems the banks have in place to manage this, and so they have prioritized prior customers to push the money out as fast as possible. The banks have been asking Fincen to relax their regulations, but there is no indication that the rules will change anytime soon, and there is a distinct lack of sympathy for the banks from applicants and lawmakers alike. There must be some solution to this problem before the PPP can work as planned.
April 8 Update – Fight Continues for Additional PPP Funds, More Details on Recovery Checks for American Households
The partisan wrangling regarding additional funds for the PPP has begun. House Speaker Nancy Pelosi (D-California) and Senate Minority Leader Chuck Schumer (D-New York) have rolled out an alternate plan to relieve the PPP. In addition to the 250 billion in additional funding, they are also demanding 150 billion for state and local governments, 100 billion for hospitals and community health centers, and more money for food stamps. They also wish to add strings to the 250 billion for the PPP, mandating that half of the amount be dedicated to small lenders to help farmers, women, veterans and minority-owned companies. This will doubtless be the start of a furious debate within Congress, and it is probable that tomorrow’s Senate session that was specially called to pass this additional funding will end in impasse. Unless a deal is reached quickly the PPP will have to make do with the initial 350 billion, 70 billion of which had been claimed as of Tuesday.
Another much-touted provision of the CARES Act was the recovery checks. Below is outlined some of the main points of these checks, with a link at the bottom to a more thorough FAQ released by Senator Marco Rubio (R-Florida).
All U.S. residents with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), who are not the dependent of another taxpayer and have a work-eligible Social Security Number, are eligible for the full $1,200 ($2,400 married) rebate.
For each child under 17 there is an additional $500 added to the rebate.
The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the above thresholds. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.
No action will be required for the vast majority of Americans to receive a rebate check since the IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return.
Recent news & resources:
April 7 Update – Senate Expected to Approve Additional PPP Funds
The slow bureaucracy of government is slowly stumbling its way towards an efficient program to handle the flood of PPP loan applications. Since the program officially opened for applications last Friday, a myriad of snags and complaints have dogged the efforts of the SBA and the banks to quickly and efficiently process the load. Putting aside technical and procedural problems that will be fixed with time, the main macro-concern for banks, lenders, and applicants alike has been the total amount of money allocated for the program.
The CARES Act allocated 350 billion dollars for the PPP loans, and after a huge chunk of that amount was claimed in the first weekend, it became clear that much more money would be needed to keep the program running. To address these concerns, Treasury Secretary Steve Mnuchin has met with Senate Majority Leader Mitch McConnell (R-Kentucky) and negotiations are under way to inject an additional 250 billion dollars into the PPP. There are now tentative plans for the Senate to meet this Thursday to approve these funds. As always, keep in touch with your local bank for updates regarding their policies regarding the PPP.
At the direction of President @realDonaldTrump, I’ve spoken with @SenateMajLdr, @SenSchumer, @SpeakerPelosi, and @GOPLeader to secure an additional $250 billion for the #PPPLoan program to make sure small businesses get the money they need!
— Steven Mnuchin (@stevenmnuchin1) April 7, 2020
April 6 Update – Demand High for PPP Loans in First Week
The Payroll Protection Program has now been rolled out across the nation, and we can see the logistical problems whenever the government rolls out a multi-billion dollar program in one week. For starters, many are reporting that their bank is not accepting PPP loan applications because they have not received certification or proper instruction from the SBA. Some banks, the most notable being Wells Fargo, opened applications last weekend and have now closed them, claiming that the initial 10 billion dollars they had received authorization to allocate has been capped out.
However, despite these early problems, money is being loaned out, at least 22 billion total over the weekend with 10s of thousands of applicants, small businesses, nonprofits, churches, being approved. An interesting statistic to note is that while 1200 banks have started to participate in the PPP program, there are 4000 banks that have not yet started, so your bank might not yet be offering the loans. This is of particular concern because Bank of America has reported that it has received applications for 10% of the entire 350 billion dollar allotment just during the weekend. Should the PPP run out of available funds it has been indicated that they would ask Congress for more funds, though that might run into whatever political environment will exist in the next month. It is paramount that you continue to contact your bank for information regarding how they are handling the PPP.
1/ Interesting comments on PPP that I just rec'd via email from the CEO of a large regional bank:— Brock Blake (@BrockBlake) April 6, 2020
"Rest assured that there are plenty of funds. Even with the 'hectic free for all' that happened Friday & Saturday, only $22.5 billion in funds have been approved....
PRESS RELEASE: SBA Clarifies Eligibility of Faith-Based Organizations to Participate in Paycheck Protection and Economic Injury Disaster Loan Programs
WASHINGTON – SBA Administrator Jovita Carranza today announced that SBA issued guidance clarifying that all faith-based organizations impacted by Coronavirus (COVID-19) are eligible to participate in the Paycheck Protection Program and the Economic Injury Disaster Loan program, without restrictions based on their religious identity or activities, to the extent they meet the eligibility criteria outlined in the CARES Act that was passed by Congress, signed into law by President Trump, and implemented by the Paycheck Protection Act Interim Final Rule.
“Following the passage of the emergency economic relief assistance, the Administration and Congress acted to ensure that small businesses and non-profits alike have access to critical funds to keep their workers paid and employed,” said Carranza. “Faith-based organizations have always provided critical social services for people in need, and SBA will make clear that these organizations may access this emergency capital.”
The Paycheck Protection Program is designed to keep small business workers employed and provide small businesses with capital through the nation’s banks and other lending institutions, with support from the SBA. The Paycheck Protection Program’s maximum loan amount is $10 million with a fixed 1% interest rate and maturity of two years. SBA will forgive the portion of loan proceeds used for payroll costs and other designated operating expenses for up to eight weeks provided at least 75% of loan proceeds are used for payroll costs.
The Economic Injury Disaster Loan program provides qualifying small businesses and non-profits with working capital up to $2 million with low interest rates and terms extending up to 30 years.
“While every American is being affected by COVID-19, the impact of this pandemic is particularly hurting our schools and places of worship, and disproportionately impacting the underrepresented communities, the sick, the elderly and the lower income,” added Carranza. “It’s vitally important that organizations focused on delivering critical social services and meeting community needs remain viable, particularly during this economically challenging time.”
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
April 3 Update – SBA Clarifies PPP Language for Churches & Nonprofits
The final interim rules for the Payroll Protection Program were released last night and can be found below. Many, including Senator Josh Hawley, were concerned that unclear language in the rules would lock churches and religious nonprofits out of the program. To alleviate these concerns the final guidance confirms that “All loans guaranteed by the SBA… will be made consistent with constitutional, statutory, and regulatory protections for religious liberty. Nothing in [SBA nondiscrimination regulations] shall apply to a religious corporation, association, educational institution or society with respect to the membership or the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its religious activities.” Senator Hawley has continued to voice concern that the new rules could still cut some churches out or the loop, and the SBA has promised to further update the guidelines as the program gets rolling. The gist of this is that churches and religious nonprofits DO qualify for the PPP loans and you can now apply for these loans at your local bank.
The PPP launches today and if you go to your bank you SHOULD be able to apply, however, many banks and other lenders are complaining that they have not received the guidance to properly implement these loans. So, some banks are accepting applications, some are accepting applications with a delay on funds, and others are not accepting any applications until they get more clarity on the guidelines. Go to your bank and find out if they are accepting applications, and ask for more information. The final application form is below.
If you want to know the size of the loan you would receive under the PPP you can use the tool below made by Vanderbloemen group and for incredibly detailed information you can visit their website.
The SBA guidance out today on who qualifies for the Paycheck Protection Program is a mess. Despite the plain text of the statute Congress passed, today’s guidance may exclude many churches & religious nonprofits. @SBAJovita & Treasury must fix this problem now— Josh Hawley (@HawleyMO) April 3, 2020
April 2 Update – SBA Releases FAQs on Small Business Loans
Today the U.S. Senate Committee on Small Business and Entrepreneurship released a FAQ document on the SBA’s Small Business loans. The full text of the FAQ can be found at the link below, but I will outline some of the new details that have been revealed in the document here.
The Paycheck Protection Loans are intended to cover 8 weeks of payroll expenses and other payments towards debt obligations
The 8 week period can be applied to any time between February 15 and June 30.
The loan is forgiven at the end of the 8-week period after you take out the loan. Borrowers will work with lenders to verify covered expenses and the proper amount of forgiveness.
You can apply for the loans up until June 30
Moving out of the provisions of the bill, some local and regional Small Business Administration offices are wrongly informing the public that churches and religious nonprofits do not qualify for Payroll Protection Loans. Missouri Senator Josh Hawley has written a letter to the head of the SBA demanding that he clarify to all sections of the department that loans are open to churches and religious nonprofits. This exemplifies the period of confusion and delays that always occur when such a major change in the working of our government is implemented. Another example of this is the fact that the Payroll Protection Loans were due to become available tomorrow, however, that looks unlikely to happen. The banks and the Treasury department are embroiled in an argument over the responsibility for fraud. The banks, who are being asked to speed up the loan process, do not want to be on the hook for any crime or fraud, but the Treasury Department won’t allow that. As it stands, until an agreement on this issue is reached, the loans will be unavailable. Add to that the general lack of guidance and coordination from the SBA to the banks and other lenders, and the myriad of problems will probably not be resolved soon. The best advice right now is to keep gathering information from your bank and the SBA website, and wait for further updates.
The SBA needs to step up for the sake of the small businesses, churches, synagogues, charities and more who are depending on the SBA relief approved by Congress. The Administrator needs to fix the disinformation about eligibility and issue clear guidelines immediately pic.twitter.com/I54vmwcXH2— Josh Hawley (@HawleyMO) April 2, 2020
My understanding of the problem with the SBA program is banks don’t want to be responsible for crime and fraud in loans since they are being asked to write loans in a hurry. But treas won’t take the banks off the hook. At stake: $ getting out the door in days, weeks or months.— Steve Liesman (@steveliesman) April 2, 2020
3/ It’s 12 hours before America’s small businesses will be applying... and they STILL haven’t released a new app for lenders.— Brock Blake (@BrockBlake) April 2, 2020
**There’s no way this will be ready by tomorrow.**
No one actually knows what’s needed to actually document the application. There’s been no updated
April 1 Update – About Economic Injury Disaster Loans (EIDL)
Today we will talk about the other main aspect to the CARES Act that nonprofits could utilize, The Economic Injury Disaster Loans. The EIDL loans were created, as their name implies, to help Small Businesses and nonprofits through times of disaster. The CARES Act has expanded the definition of “disaster” to include this current pandemic, so these loans are now available. The main provisions of these loans are as follows:
- Loans are up to $2M
- The term is 30 years
- Interest Rates are 2.75% for non-profits)
- The first month’s payments are deferred a full year from the date of the promissory note.
The CARES Act added some new provisions that are as follows.
- EIDLS can be approved by the SBA based solely on an applicant’s credit score, not repayment ability, and no tax return is required.
- EIDLS smaller than $200,000 can be approved without a personal guarantee. They do not require real estate as collateral and will take a general security interest in business property.
- Borrowers can receive $10,000 in an emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments or repaying obligations that cannot be met due to revenue loss.
You can apply for these loans immediately, and find more information, at https://www.sba.gov/funding-programs/disaster-assistance.
March 31 Update – About Payroll Protection Loans
Today we will cover some more details of how exactly the Payroll Protection Loans will operate.
- Lenders will most likely be your current banker. They will receive the money from the Small Business Administration. So contact your current banker and ask if they are participating in the Small Business Administration loans provided in the CARES Act.
- No collateral or personal guarantees will be required by board members, trustees, or owners. Normally in small business loans, an owner or board member has to sign a personal guarantee to acquire the loan. If the loan is not repaid, then the owner or board member has to personally make good on the loan amount to the bank. However, this does not apply under the new SBA loans.
- Funds that are not forgiven have a loan maturity of 10 years. The interest rates for these loans is currently undetermined.
- You will need to certify that the funds you obtain through the loan will be used either to support ongoing operations or to retain workers and maintain payroll or make mortgage, lease, and utility payments.
- The Small Business Administration will have until April 11 to give its final guidance on these loans, so look for more information in the future.
March 30 Update – Policy Details Revealed Regarding CARES Act
Now that the CARES Act has passed Congress, we can get a better picture of some of the details on how the policies will be implemented. For the Payroll Protection Loans (7A loans) the following details have now been revealed.
- Offered to 501(c)(3) nonprofits with fewer than 500 workers and some 501(C)(19) veteran organization (have to be in operation before February 15, 2020)
- Loans are given up to a maximum of $10 million, or 2.5 times the average monthly payroll costs, whichever is lower – including wages for employees making under $100,000, as well as expenses for paid sick leave, healthcare and other benefits – during the 1-year period before the date on which the loan was made.
- The maximum interest rate under this program is 4%
- The loan term is up to 10 years
- No personal guarantee or collateral is required for the loan
- Payments are deferred for up to six to 12 months
Part of this loan may be forgiven and not counted as income to you, if it’s spent during the first eight weeks on operating expenses, which consist of the following.
- Payroll costs, excluding prorated amounts for individuals with compensation greater than $100,000
- Rent pursuant to a lease in force before February 15, 2020
- Electricity, gas, water, transportation, telephone, or internet access expenses for services which began before February 15, 2020
- Group health insurance premiums and other healthcare costs.
In order for the amounts to be forgiven, you must maintain the same average number of employees for the first eight-week period beginning from the beginning of the loan as you did from February 15, 2019 – June 30, 2019 or from January 1, 2020 until February 15, 2020. If you don’t meet this requirement, the amount forgiven is reduced. The same reduction goes for every employee salary that you reduce by over 25% compared to the previous quarter. However, there is an exception to this in that if you won’t be penalized for a reduction in employment or wages during the period from February 15, 2020 to April 26, 2020, if you rehire employees that you previously laid off or restore any decreases in wages or salaries by June 30, 2020.
For more information visit the Small Buisness Administration’s website.
March 25 Update – Congress Passes CARES Act Relief
Notably, it appears that Senator Lankford’s amendment to increase the cap on non-itemized deductibles for charitable giving is not included in the agreement. It remains to be seen whether the amendment will pass. The CARES Act is expected to pass the Senate and the House sometime this week. The final details will only become clear when the bill is passed.
The general breakdown of the whole CARES Act as it currently stands in the Senate bill that passed is this:
* $1,200 checks would be sent to most American households.
* $350 billion would be made available in loans for small businesses and nonprofits with less than 500 employees.
The House under Speaker Nancy Pelosi has been attempting to get certain unrelated matters placed into the bill because she knows it must pass. This does not sit well with Republicans in either chamber.
One such item regarding voting and handling of ballots was reported on by Florida State Representative Blaise Ingoglia. Ingoglia, who is also a former Florida State Republican Party Chairman, posted on Facebook:
“Under this scheme people can request a ballot WITHOUT ID and vote WITHOUT proving they were the person voting. All they would have to do is “say” it was them.
Under this bill, a person can be paid to ballot harvest as long as they are not paid on a “per ballot basis”. So, essentially, someone can be riding around with HUNDREDS OF BALLOTS in the front seat of their car and nobody could stop them as long as they’re paid hourly/salary.
Democrats are saying this is all “helping voters” in this trying time when, in reality, what they are doing is incentivizing (and promoting) voter fraud for one simple reason….to try and defeat President Trump.”
Other matters tucked into the House bill that have been criticized as having to do nothing with a relief package include abortion rights and ear marks for various universities, unions, National Endowment for the Humanities, Migrant & Refugee funding, Chinese controlled businesses, and others.
The House is expected to vote on the matter on Friday. It remains to be seen what the final version of the COVID Aid package will contain including unrelated pork funding and other projects.
Follow the Florida Family Policy Council on social media and sign up for email alerts to get the latest on this historic bill and how groups can apply to obtain this aid.
Last week’s interview by the Florida Family Policy Council on the Corona Virus with US Senator Marco Rubio has been downloaded over 10,000 times and contains valuable wisdom and insight on this crisis for churches and pastors. Listen now or read the transcript here.
CARES ACT Final Text (PDF)
Lindsey says it could affect as many as 80 million workers if all small businesses eligible apply for it.
– it is authorized in the bill for up to $300 billion over the 4 mos.
– Lindsey says that could go as high as $1 Trillion if small businesses take full advantage
— Eamon Javers (@EamonJavers) March 20, 2020