- The application deadline for the Paycheck Protection Program was extended on Saturday after President Donald Trump signed the extension bill that Congress passed.
- Potential applicants now have until August 8 to apply for federal aid funds under the program to help businesses affected by the coronavirus pandemic.
- When the original deadline came June 30, there were about $ 130 billion left in funds, and some companies were unaware they were eligible for the program.
- Visit the Business Insider home page for more stories.
On Saturday, President Donald Trump signed an amendment to the Paycheck Protection Program that gives businesses affected by the coronavirus pandemic more time to apply for federal funds.
The law extends the deadline to apply for the federal government’s loan-based relief program until August 8. The original deadline to apply for the loans was June 30, but Congress moved quickly to extend the deadline after around $ 130 billion remained since the $ 660 billion jackpot started, NPR reported.
The Senate initially approved the extension Tuesday with unanimous consent, and the House of Representatives did the same the next day. Trump signed the bill on July 4, giving potential beneficiaries just over a month to apply for the remaining funds.
As of June 30, more than 4.8 million loans totaling $ 520 billion have been approved, with an average loan amount of about $ 107,000, according to the Small Business Administration.
Here’s what prospective applicants should know before submitting the application.
What are the Paycheck Protection Program funds?
Paycheck funds are federally backed loans that businesses can apply to help cover expenses and maintain worker levels. Although they start as loans, companies that meet specific SBA criteria can apply to have their loans forgiven so they don’t have to be repaid.
Part of the program is that no fees will be imposed on small business loans, no collateral is required, and repayment begins after six months. Interest rates are also set at 1%, according to the SBA.
Who can apply for funds from the paycheck protection program?
While the program is intended for small businesses, that title covers more than just family-owned hardware and ice cream parlors. As Business Insider’s Dominick Reuter reported, self-employed and self-employed, including contract workers, can also apply for funds.
Companies with more than 500 employees can also access the funds if they meet the SBA’s size standards. Business owners who are unsure whether their company counts as a small business can use the SBA’s size standards tool, located on their website.
What July and August Applicants Should Know
Loan applicants who complete the process after June 5 are subject to new loan maturity guidelines. The SBA said that beneficiaries who filed an application before June 5 will be subject to a two-year maturity, while those who file an application after June 5 will have a five-year maturity.
Loans are also processed through local banks and lenders to simplify the process rather than the federal government. The SBA provides a list of lenders that can process applications and issue PPP loans on its website.
How to get loans forgiven by the federal government
The SBA website says loan forgiveness will be based on “employee retention criteria” and will only be awarded if the funds are spent on “eligible expenses.” The Payroll Protection Flexibility Act recently amended the program rules so that only 60% of the funds received have to go to payroll expenses for loans to be forgiven, as reported by Joseph Zeballos-Roig of Business Insider.
Even if borrowers don’t use 60% on payroll, they can still apply for partial forgiveness. Businesses seeking this option must complete a five-page form that can be found on the SBA website to request forgiveness after reviewing the rules for forgiveness.
