Earlier this month, when the CARES Act made $349 billion dollars available to businesses struggling under the Covid-19 quarantine through “forgiveable” Paycheck Protection Program (PPP) loans, it was a mad dash to get applications in. Fast forward a few weeks, and the government-backed funds are depleted, with many businesses still in the red.
As we know, the first round of applications and funding didn’t go so smoothly. In addition to the different interpretations of the application math, it’s coming to light that many of the businesses who received funding were not, in fact, small, struggling businesses, but rather national chains with bigger pockets. According to major news outlets, at least 17 businesses exceeded the 500 employee limit under PPP rules, due to an exception for restaurants and hotels that were hit hard and fast. These businesses alone received around $143 million in funding.
But we’re not done yet. Congress has spent the past few days negotiating a second round of funding to help businesses pull through the stalling economy. Currently, the deal would expand PPP funding by $310 billion, while the SBA’s Economic Injury Disaster Loan would receive another $60 billion.
However, the bill includes more than just funding for businesses. There are also provisions in the works to expand financing for coronavirus testing (around $25 billion) and hospitals ($75 billion), bringing the total cost of the bill to nearly $500 billion. In the past two months, three other bills have been rushed through Congress to reduce the economic impact of the coronavirus quarantine. This bill would bring the total cost to almost $3 trillion.
Both House Speaker Nancy Pelosi (D-Calif.) and President Trump expressed optimism about the agreement. A funding package is expected to be approved imminently, having been approved in the Senate last Tuesday and going to a vote in the House today.
Hopefully, this round of legislation will include new provisions to prevent the initial application issues encountered, and to ensure that the businesses receiving funds are the one who need it the most.
For businesses hoping to get in on the next round of PPP funding, Ecom CPA recommends checking out Cross River Bank and Paypal, who has been approved to offer PPP loans as a non bank lender by the SBA.
Veem is also offering a convenient method of application for business owners, and provides a simple list of supporting documentation to gather.