What to Do with All that Money Left in the PPP?
Substantial PPP funds – some $138 billion – were unallocated as of the June 30th PPP loan application deadline.
In a surprise move, Congress extended the time to apply for PPP loans until August 8th.
Congress Extends the Deadline to Apply until August 8th.
The CARES Act Alert #10 focused on Congressional passage of the Paycheck Protection Program Flexibility Act of 2020 (P.L. 116-142) that highlighted a variety of fixes to the PPP loan program. However, the legislation did not extend the ability of the program to accept new loan applications after June 30, 2020. Nearly 4.9 million applicants received $520.6 billion in funding since the program was established, leaving a substantial amount of PPP loan funds in the program as of the June 30th application deadline.
With a looming threat of more closures as a result of an increasing number of COVID-19 cases, Congress passed and President Donald Trump signed into law bipartisan legislation (S. 4116) extending the PPP Loan application deadline until August 8, 2020.
The legislation also contains a technical fix to the regular 7(a) business loan guarantee program of the Small Business Administration (SBA) to prevent a shut-down in case the PPP exhausts its funding before the end of the current fiscal year (September 30, 2020).
Expect More Legislative Changes to the Payment Protection Program
The August 8th date was selected as a temporary reprieve because Congress hopes to complete its work on another economic relief package prior to their departure from Washington for the August district/state work period and the two presidential nomination conventions. It remains to be seen whether this will happen before then. Some options that Congress is considering for this package include allowing current PPP loan recipients with fewer than 100 employees to apply for a second tranche of funding in case of a reissuance of government-mandated pandemic-related closures (S. 4014) and automatic forgiveness of PPP loans under $150,000 (S. 4117). None of this is set in stone, so please watch for further CARES Act Alerts on this topic.
To explain key relief for 501(c)(3) nonprofits and small businesses in the $2 trillion CARES Act (complete text) and subsequent funding laws, we published our CARES Alert #1 (Help for Small Businesses & 501(c)(3)s via the PPP); CARES Alert #2 (Get Ready to Apply); CARES Alert #3 (PPP vs EIDL); CARES Alert #4 (Treasury Guidance); CARES Alert #5 (SBA’s Interim Final Rule); CARES Alert #6 (IFR on Affiliation & Religious Nonprofits); CARES Alert #7 (FBO Guidance); CARES Alert #8 (Unemployment Benefits, including FBOs); CARES Alert #9 (Safe Harbor Guidance – Just in the Nick of Time); CARES Alert #10 (Fixes to the Payment Protection Program); and CARES Act Alert #11 (New EZ PPP Loan Forgiveness Application)
Our CARES Act Team is available to help you navigate these difficult issues, including the unique issues faced by nonprofits, religious organizations, and churches. For assistance, please contact one of our attorneys: Nancy LeSourd, Matthew Szymanski, Scott Ward, or Derek Gaubatz. Our CARES Act Team also includes our non-attorney consultant Phil Eskeland. Mr. Szymanski and Mr. Eskeland bring experience from their past service, respectively, as the chief of staff and the deputy chief of staff of the Small Business Committee of the U.S. House of Representatives, including during the legislative response to 9/11. More Alerts to follow.