Additional Paycheck Protection Program Loan Funds Available
Over the last several weeks, Sullivan has issued numerous client alerts that explore the Paycheck Protection Program (PPP) instituted under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and other funding opportunities available to small businesses.
The CARES Act initially authorized an aggregate of $349 billion in loans to be made to small businesses under the PPP, which amount was exhausted within approximately two weeks of becoming available. It has been widely reported that countless businesses were unable to obtain a PPP loan before the $349 billion was allocated.
Today, new legislation was signed into law that authorizes an additional $310 billion to be available for loans under the PPP. Under the new legislation, $60 billion of the additional funding must be serviced or underwritten by smaller financial institutions. Of the $60 billion, $30 billion must be serviced by financial institutions that have between $10 billion and $50 billion in consolidated assets, while the remaining $30 billion must be serviced by community financial institutions or financial institutions with less than $10 billion in consolidated assets. The new legislation also allocates an additional $10 billion to the Economic Injury Disaster Loan (EIDL) program, another program available to small businesses through the Small Business Administration (SBA), as well as $2.1 billion to support SBA staffing.
We expect that the additional $310 billion will be allocated just as quickly as the initial $349 billion, so it is important to act swiftly and contact your loan officer to get started on your application. Businesses that have already filed applications in the first PPP round and that did not receive a loan in that round due to the lapse in appropriations will likely be given first priority by many financial institutions as additional funds become available.
Also, as a reminder that PPP loans are intended for businesses for whom the current economic uncertainty makes the loan request necessary to support ongoing operations and presumably in response to some widely circulated news reports on this issue, the SBA and the Treasury Department recently updated their joint FAQs to highlight that the loan application requires a good faith certification by the business that the loan is necessary. Q&A-31 states that when making the certification businesses should consider "their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business."
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Sullivan has developed a rapid response team of attorneys to help our clients and our communities cope with the impact of the COVID-19 pandemic and understand the implications of the CARES Act and other actions taken by state governments and the federal government. Please refer to Sullivan’s resource center at www.sullivanlaw.com/COVID19 for more information and for access to Sullivan’s library of related advisories.
Please know that Sullivan is focusing substantial efforts to provide assistance to businesses and individuals affected by COVID-19 and benefited by the CARES Act. If you have questions about how to move forward and navigate the novel legal issues raised by COVID-19 and/or the CARES Act, please contact your primary Sullivan attorney or send a message to CARES@sullivanlaw.com