PPP Saved The Day For Many Businesses, Now It Has Been Extended
If you were among the first businesses to receive a CARES Act Paycheck Protection Program (PPP) loan, it is near the time when you can request loan forgiveness. The funding came with stipulations regarding how quickly the money had to be spent and how much of it (75%) had to go toward paying employees.
Fortunately, Congress has passed a bill called the Paycheck Protection Flexibility Act extending the amount of time PPP loan recipients have to spend their funds from eight weeks to 24 weeks. It also lowers the portion of funds borrowers must spend on payroll costs lowers to 60% (down from 75%) in order to qualify for forgiveness of the full PPP loan amount.
Related: How To Apply For PPP Loan Forgiveness
One of the big problems with the original law for small business owners, particularly the restaurant industry, is that with revenues down to a fraction of their pre-COVID levels, it became impossible to spend 75% on salaries and still make money. The original version (passed on March 27) left only 25% of the funding assistance for rent, mortgage, and utilities. The formula was not working for many businesses, some of which had refused to take funding under the initial required terms of the loan. Fortunately, the government is reacting to address the most challenging issues.
Overall, the CARES Act PPP lending program has been a success. It has put needed revenue into the hands of business owners who otherwise might have had to declare bankruptcy.
A great PPP success story is ...
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