WASHINGTON – A loan program to help small businesses stay afloat and pay their employees is back five months after its first two funding cycles have ended.
The US Small Business Administration and the US Treasury Department have relaunched the Paycheck Protection Program, or PPP, loan portal Monday.
“The SBA continues its dedicated commitment to underserved small businesses and addresses potential barriers to accessing capital,” SBA officials said in a statement. declaration after tweeting the ad.
In the last funding round, businesses that received loans in the last year will be able to borrow up to $ 2 million as long as they have no more than 300 employees and experience a 25% or more drop in their quarterly income. First-time borrowers with no more than 500 workers will be able to borrow up to $ 10 million.
The loans, which can be canceled, will have a term of five years and carry an interest rate of 1%.
The PPP is relaunched under the coronavirus relief bill approved by Congress in late December, providing for $ 284 billion in new loans. The first two rounds, which began on April 3 and ended on August 8, granted more than 5.2 million loans with a cumulative value of $ 525 billion.
The first round of the program saw overwhelming demand, and the Small Business Administration approved $ 349 billion in loans in just two weeks.
Trump signed the last COVID-19 relief bill in December after resisting for several days. The president said he wanted to increase stimulus checks, also included in the bill, from $ 600 to $ 2,000 per eligible person. He also cited other expense items he disagreed with as an incentive for his delay in signing the legislation.
After Trump signed the bill, the Democratic-led House voted to increase the amount of stimulus checks, but Majority Leader Senator Mitch McConnell, a Republican, refused to submit the measure to senators. for an immediate vote.
The SBA will initially only accept applications submitted by Community Financial Institutions, or CFIs, from lenders whose clients are minority-owned and economically disadvantaged businesses. The SBA has said it will begin accepting applications from all of its lenders within days of the initial CFI period.
As with the first two cycles of the PPP, applications must be submitted online to banks and other SBA-approved lenders. All requests must be submitted and approved by March 31st. Loan amounts are calculated using a company’s salary expenses; companies can use their 2019 or 2020 payroll to calculate how much they can claim.
But for many businesses, including restaurants, gyms, and retailers that depend on people gathering in or near large numbers, money from previous PPP loans was nowhere near enough as the pandemic continued to grow. worsen and drag on. It is estimated that more than 100,000 small American businesses have closed their doors since the start of the epidemic.
In addition, many businesses were unable to obtain loans, including newly established businesses and those with financial records that did not meet banking requirements. Many businesses have applied to multiple banks, often because they couldn’t get their subsequent inquiries and inquiries answered, and many of these business owners gave up in frustration or ran out of business. time.
The Associated Press contributed to this report. This story was reported from Los Angeles.