By Ruth Simon and Peter Rudegeair
Updated July 6, 2020 1012 am ET
Small-business owners who haven’t yet applied for forgivable loans designed to ease the economic pain of the Covid-19 pandemic now have another chance. Congress passed legislation extending the deadline for submitting applications for the federal Paycheck Protection Program, and President Trump signed the bill on July 4.
Below are answers to some frequently asked questions about the program:
What is the new deadline for PPP applications?
Small-business owners now have until Aug. 8 to apply for PPP loans. The Small Business Administration will begin accepting loan applications Monday, an SBA official said. The program’s original deadline was June 30.
Why is Congress extending the program? I thought the money ran out.
Roughly $130 billion of the $670 billion set aside for the PPP remains unclaimed. It took
less than two weeks to deplete the original $350 billion in PPP funding, but demand was weaker after Congress allocated additional money to the program. In addition, more than 170,000 loans totaling about $38.5 billion have been canceled as of May 31, according to a report issued June 25 by the U.S. Government Accountability Office.
Some borrowers gave back their loans after the Treasury Department said public
companies and others with alternative sources of financing shouldn’t tap the PPP; others returned funds because they didn’t feel they could meet the program’s original spending requirements because, for instance, their business remained closed.
How have the program rules changed?
How have the program rules changed?Businesses that want to qualify for loan forgiveness now have 24 weeks instead of eight weeks to spend PPP funds. The portion of the loan that must be spent on payroll has been reduced to 60% from 75%. Companies won’t be penalized if workers who have been offered their jobs back with the same hours and pay don’t return.
The new requirements made loan forgiveness easier to secure for companies that were
slow to reopen or whose business has recovered gradually, and for companies that spend more on rent and certain other qualified expenses.
Read the full article at the Wall Street Journal here.