The Paycheck Protection Program has exhausted its $350 billion allocation and is not accepting any more lenders or applications at this time, the Small Business Administration announced Thursday.
However, “there are active efforts on the Hill to extend it and that could happen as soon as Friday,” said Scott Sinder of the law firm Steptoe and Johnson. Sinder gave a presentation on the Paycheck Protection Program during the National Association of Insurance and Financial Advisors’ online town hall meeting Thursday.
Many NAIFA members are applying for the funds for their own businesses as well as helping their business clients apply for their own loans.
“So the biggest question we’re hearing is ‘I’ve already applied or I’m in the process of applying and now I see the money has run out – will I get any of this money?’” he said.
Sinder said that if a business has already applied for a loan through the program, and the bank has entered the information in the SBA online portal, “we think your application is in the queue.”
In addition, he said, some parts of the program are still awaiting additional guidance from the SBA, which he expects will be made public no later than April 26.
Sinder gave a rundown on some of the program’s highlights.
- Loans are 100% federally guaranteed. No collateral, personal guarantees or fees.
- Full loan forgiveness for employers that maintain or restore pre-crisis payroll.
- Loan payments are automatically deferred for six months, but interest will accure during the deferral period.
- There is no recourse against loan recipients for nonpayment, unless the loan funds are used for purposes not permitted under the program.
- At least 75% of the loan proceeds must be spent on payroll costs. These include: Employees’ salary, wages, commissions and/or cash tips up to $100,000 a year, paid leave, payment for group health benefits, retirement benefits, and state and local payroll taxes. Self-employed owners, independent contractors and sole proprietors count as employees in payroll cost calculations.