SBA Issues PPP Flexibility Rules! Reminder: Loan Application Deadline June 30.
The Small Business Administration has released new rules implementing the provisions of the Paycheck Protection Program Flexibility Act, available here. For those that have already received a PPP loan, many may be nearing the completion of their loan period and should be aware of significant changes regarding the loan forgiveness application process. The SBA is also currently revising the PPP loan forgiveness application form. While more guidance may soon follow, the rules include some helpful clarification, including confirmation that borrowers with less than 60% of expenditures dedicated to payroll will be eligible for partial loan forgiveness. With more than $100 billion remaining in Paycheck Protection Program (PPP) resources, any potential applicant should take note that the opportunity to apply for a loan closes on June 30, 2020.
SBA Re-Opens Economic Injury Disaster Loan Program for New Applicants.
The SBA announced yesterday that it has reopened its Economic Injury Disaster Loan (EIDL) program, offering long-term, low interest assistance for small businesses with fewer than 500 employees, including non-profit organizations. EIDL assistance can be used to cover payroll, pay debt, or fund other expenses that are not already covered under a Paycheck Protection Program loan. Additionally, the EIDL Advance will provide up to $10,000 ($1,000 per employee) of emergency economic relief that does not have to be repaid. Loans are administered by the U.S. Treasury, and applications are made directly to the SBA. Further information is available in the SBA press release and the EIDL loan application portal.
Main Street Lending Program for Nonprofits Proposed by Federal Reserve; Comments Due June 22.
The Federal Reserve announced yesterday that it is inviting public comments on a Main Street Lending Program, specifically designed for nonprofits. Partners in the nonprofit sector and leaders in Congress have called for implementation of loan opportunities for nonprofits since such a program was authorized under the CARES Act. The minimum loan size for the 5-year loans is $250,000 while the maximum loan size is $300 million. Principal payments would be fully deferred for the first two years of the loan, and interest payments would be deferred for one year. Eligibility requirements related to liquidity, limitations on the percentage of revenue from donations, and other requirements may exclude many potential loan applicants. Further details regarding the proposed terms of the loans are available in the Overview of New Nonprofit Loans and in the Federal Reserve's press release. The Federal Reserve says "public feedback is being sought to help make the proposed program as efficient and effective as possible." The nonprofit sector is mobilizing to weigh in and feedback may be submitted via email here until Monday, June 22.