On July 4, 2020, President Trump signed a bill that reopens the Paycheck Protection Program (“PPP”) loan application period until August 8, 2020. The five-week extension has been approved by both houses of Congress last week unanimously. consent. The extension was somewhat surprising, as the Senate passed it just hours before the PPP’s initial expiration on June 30.
The PPP loan facility is an essential element of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). Our full analysis of PPP loans appears here [“Client Alert: What Businesses Need to Know…”], and our analysis of the PPP Flexibility Act promulgated in June appears here [“Flexibility Act Makes Significant Changes to PPP Loan Terms”]. We also discussed a key feature of PPP loans – the forgiveness – here [May 15 update] and here [May 19 update].
Congress has indicated in recent weeks that it plans to adopt a second stimulus package for small businesses struggling with the economic effects of the COVID-19 pandemic. The expansion of PPP loans preserves a source of funding for these companies while Congress begins its work.
The Small Business Administration (“SBA”), which administers PPP loans, stopped accepting new applications at midnight on June 30, 2020. The PPP was launched in early April and provides forgivable loans that small businesses can use. to cover payroll and other critical expenses like rent and charges.
After the end of the first round of financing of PPP loans, a second round was approved. To date, there is approximately $ 129 billion left. According to the SBA, as of the close of business on June 30, nearly 4.9 million loans totaling more than $ 520 billion had been approved.