Act Now to Apply for Paycheck Protection Program Funds or Miss Your Opportunity
April 25, 2020 The Senate passed a $484 billion bill on April 20 that expands small business aid and increases financial support for hospitals and testing. The bill allows for the replenishment of the Paycheck Protection Program (PPP) program with $310 billion and increases the small business emergency grant and loan program by $60 billion.
Final approval from the House is expected on Thursday.
Complications, Confusion, and Frustration Plague First Round Funding
As of April 16, the SBA reported it has processed 1,661,367 loans with a sum of $342,277,999,103 through 4,975 lenders. Three out of four loans granted were for $150,000 or less. The Agriculture, Forestry, Fishing, and Hunting subsector had 46,334 loans approved for a total of $4,374,343,877, about 1.14% of the overall total of funds.
There were complications aplenty with the first round of funding. Independent contractors and self-employed individuals could not apply until April 10. The Treasury came out with application guidelines four days after the deadline, and most of the loan funds were committed to other businesses shortly thereafter. Banks had little time to create loan applications and organize before accepting and processing applications. Some of those applications bounced back. They failed to meet SBA standards, which were hard to pinpoint due to frequent changes. The paperwork and documentation process for the PPP loans is also quite extensive for the banks involved, which limits the number of loans they can process with the staff they have available. Several participating banks prioritized their customers first and in rare cases took on non-member PPP applications. And since only SBA-licensed banks could participate in the first round of funding, new applicants lacking a prior affiliation with these banks often found themselves at a disadvantage.
Is It Too Late to Apply?
According to an article on The Washington Post website, time to get funds may already be running out. There are already signs that the additional funds for the Paycheck Protection Program still might not be enough to meet demand.
The long and short is apply for your PPP loan now. Barry Sturdivant, Vice President at TS Ag Finance, a firm that provides financing for agricultural producers and growers, offers the following advice:
- Contact your banker in the next 48 hours
- Verify if an application you already submitted is still active and in line for funding
- Gather your documents and have them ready to send to your banker or accountant
If you’re fortunate enough to obtain approval for your PPP loan, prepare to prove down the road that you used at least 75% of your loan on payroll. Consider keeping PPP funds in a separate account and fanatically track everything. You may want to enlist the help of a Certified Public Accountant, if you don’t already have one, to make sure you are meeting the requirements for loan forgiveness.
Subscribe to eNewsletter
