FOX Business’ Jeff Flock on Small Business First Aid and How Businesses Adjust Amidst the Pandemic.
The Trump administration on Monday reiterated the Paycheck Protection Program, a key lifeline that helped keep small businesses afloat during the coronavirus pandemic.
The rescue fund – which offers forgivable loans to businesses if they maintain their payroll – will initially only be available to first-time borrowers, with second-time applicants applying on Wednesday, according to new guidance from the Small Business Administration and the Treasury. Department.
TOP DEMOCRACIES SEE $ 900B PURCHASE REPORT PACKAGE AS JUST BEGINS
The federal government will also give preference to minority-owned businesses in the first two days of the program, by only accepting loan applications from certain credit providers that focus on communities in service.
Congress established the $ 670 billion bailout fund earlier this year with the adoption of the CARES law at the end of March. Legislators authorized another $ 284 billion last month to provide a second round of forgiving loans to small businesses as part of the $ 900 billion more comprehensive COVID assistance plan. At least $ 40 billion has been set aside for businesses with ten or fewer employees and for loans under $ 250,000 in low-income areas.
Only companies with 300 employees or less are eligible to receive a second loan, with a maximum of $ 2 million. Lenders must also prove that they saw a 25% decrease in gross income during a quarter in 2020, compared to the same quarter in 2019.
WHAT IS THE NEW $ 900B CORONAVIRUS REDEMPTION OFFER?
During the first round, businesses with less than 500 employees could receive as much as $ 10 million.
With the launch of the program, it was heavily criticized for providing assistance to trading companies that had other options to alleviate – even though small businesses were shrinking. The SBA and the Treasury Department, which jointly manage the program, sought to close the loopholes that multimillion-dollar businesses could use to fund the fund, including investigating a $ 2 million loan.
GET FOX BUSINESS ON THE GO by clicking here
Over the course of about four months, the PPP distributed about $ 525 billion in forgivable loans to 5.2 million companies, which according to the SBA saved an estimated 50 million jobs. The program closed for new applicants at the end of July, with about $ 38 billion in the fund.