Second Round Of PPP Federal Funding For Businesses Under The CARES Act
The initial round of $350 billion in forgivable PPP loans, as part of the CARES Act stimulus, was drained in less than two weeks. Approximately 5,000 lenders approved over 1.6 million PPP loans, totaling $350 billion. The maximum loan amount is $10 million, and the average loan size was $206,000. 74% of the loans issued were in amounts of $150,000 or less, 13.5% of loans were between $150,000 - $350,000, 8.5% of the loans were issued in amounts of $350,000 - $1 million, and the remaining 4% of issued loans were in amounts greater than $1 million.
This time around, the SBA made changes in the rules to the application for the PPP loan to make sure that money reached more small businesses. These changes included:
The SBA is now reviewing all loans in excess of $2 million
The affiliation rules set forth by the SBA will still allow for some portfolio companies of private equity firms to obtain eligible PPP loans but they must also certify that the "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant."
An applicant is not eligible for a PPP loan if it is involved in a bankruptcy proceeding during the time it submits the application or at any time before the loan is disbursed.
Hedge Funds and Private Equity Firms are not eligible for PPP Loans.
A business's participation in an employee stock ownership plan (ESOP) does not result in an affiliation between the business and the ESOP.
A hospital that is otherwise eligible to receive a PPP loan as a business concern or 501(c)(3) will still be eligible, regardless of ownership by state or local government, if the hospital receives less than 50% of its funding from state or local government sources, not including Medicaid.
Applicant must be aware that the SBA application form requires a certification that "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." The CARES Act suspended the requirement for borrowers to exhaust all lending options prior to applying for SBA loan funding but the borrower is still required to make the above certification.
As of Sunday, May 3rd, 2.2 million small business loans had been issued in round 2 of the PPP loan program, with an average loan size of $79,000, worth a combined $175 billion. In Colorado, 46,157 loans had been approved, totaling $3,061,726,894, according to the Treasury Department.
Altogether, during Round one and Round Two of the PPP Program, the government made 3.8 million loans totaling more than $500 billion.
If you need assistance with your PPP loan, or have questions or concerns regarding your PPP loan, contact Gantenbein Law Firm at 303-618-2122. We can help navigate any compliance, tax or regulatory questions, issues or concerns you may have regarding the CARES Act, PPP, or other CARES ACT or SBA, loan. For more information, visit www.gantenbeinlaw.com, or visit our tax and financial consultant page, Business Law page, Real Estate Law page or Tax Law page. Gantenbein Law is located in Denver, Colorado and serves clients throughout all of Colorado.