For those who did manage to receive funding via the PPP, keep in mind that to avoid repayment you have eight weeks to use the money. Currently, there is still money in the PPP given the second wave of funding. As of May 6, there’s an estimated 90 billion left and so for those who have not yet applied, doing so sooner rather than later is most definitely advised. Something else to keep in mind, for smaller companies it’s generally believed that you’ll have a better chance of being approved if you apply through a smaller lender versus a large bank.
One thing that every company applying for PPP funds or also a loan through the Economic Injury Disaster Loan (EIDL) program should keep an eye on are the ever-evolving regulations. And more changes may be ahead. A variety of entities are pushing for several major changes especially those that concern forgiveness with the PPP.
The intent of the program was to A) allow small businesses access to loans direly needed for them to stay afloat during the pandemic. B) Congress wanted to keep workers on payroll versus having them apply for unemployment benefits. Problems, however, have arisen many small business owners are having a great deal of difficulty particularly when it comes to the forgiveness provisions.
One of the primary issues is that for the loan to convert to a grant, owners have to hire back workers and yet many are still not operating or are doing so at a limited capacity. And even though many states are now starting to reopen, businesses are still not bringing in enough revenue to hire back employees at the level they had before COVID-19.
Another complaint about the program, the eight-week clock on it. As soon as a business receives the money, they have an eight week period during which to use all funds. If they fail to do so, a portion of the loan will need to be paid back. So again, if a company is not fully operating, they have no choice they have to spend the cash; they cannot just sit on the money and wait. Congress does not seem willing to address this issue anytime soon. Nor is Congress backing down from the requirement that 75% of those funds have to go toward payroll to receive full forgiveness. Many owners are currently lobbying trying to get that number cut to 50% of the loan amount.
If a business owner is unsure if they will be able to fulfill forgiveness requirements and are consequently nervous about having to face repayment, the Treasury Department has made the provision that the funds can be returned by May 14 with no questions asked.
First Union Lending is here to help during this difficult time. We can aid your small business in qualifying for PPP funds. Our goal is to ensure that our clients survive and proceed to thrive as their state begins to reopen. Call today to see what types of loan programs we have that could work for you!