Small Business Administration (SBA) Disaster Loans Reopen and Paycheck Protection Program (PPP) Available Through June 30th, 2020

Updated guidance and deadlines for the PPP issued by SBA.

Paycheck Protection Program (PPP) Deadline: The last day for approved applications to be submitted to the SBA under the Paycheck Protection Program will be June 30th, 2020. If you are working with a lender to submit an application for the PPP program, please ensure that the approvals are submitted prior to the close of the program. No new approvals will be accepted following June 30th, 2020 and many lenders are creating earlier cutoff dates for applicants to be sure all paperwork is finalized.

Updated Guidance: SBA has issued new guidance to PPP made possible by the signing of the Paycheck Protection Program Flexibility Act (“The Flexibility Act”) on June 5th. These new rule changes cover the following provisions:

Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.

Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.

Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.

Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.

Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.

Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.

Agricultural businesses includes those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).

SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.

The PPP is a loan program for small businesses, self-employed, independent contractors, and nonprofits with max 500 employees, and it is intended to keep workers paid and employed. The loan amount is calculated on payroll expense, max amount $10 million, and at a rate of 1% up to 2 years. The loan is forgivable if payroll is maintained and only on allowable expenses which include payroll costs, mortgage interest, rent, and utilities. You may rehire to apply, all before June 30, 2020; however, we encourage you to submit your application now. 

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Please reach out to your bank, credit union, a CDFI nonprofit lender or online provider asap to ensure you can access this program. Our centers are here to help you find out if the new forgiveness provisions are a good fit for you. Please connect with a center to get advice today: