What You Need to Know About the PPP Loan Extension
When the government announced the PPP, the small business community was hopeful that this was the relief we needed from the global pandemic. But the program had its issues, leaving many distrustful of the lenders, the process, and the rules, which resulted in $130 billion in untouched funds when the deadline ran out on June 30.
Despite its flaws, the PPP did help thousands of businesses weather the storm, and the Flexibility Act made it easier to use the funds and have them forgiven. If you didn't apply and need cash, there's good news: You still have time. The government extended the PPP for another 5 weeks.
Let's take a look at what the new extension means for you, why you should consider it, and how to apply before time runs out.
What’s in the Mandate and Why It Matters
With the extension, you now have until August 8th to apply for a loan from the remaining $130 billion. This is a win for anyone who was unable to apply by the previous deadline.
So what else do you need to know about the extension?
1. There will be fewer lenders this time around
The lender pool will be limited, as the extension came as a surprise for many. On the list of banks expecting to take applications this round? Chase and Bank of America, reported the Wall Street Journal.
As we talked about in previous articles, the big banks prioritized loans for larger corporations to boost their bottom line. And they got caught. There’s more pressure on the national banks now, which hopefully means the loans they do give out will go to businesses that actually need them.
We still encourage you to go with a local bank if you can, but you might have more limited options than earlier in the process.
2. The Flexibility Act changed the terms—in a good way
The Flexibility Act eased some restrictions making it easier for you to use the money and have it forgiven.
For example, you now have 24 weeks to spend the funds, instead of 8, and you’re only required to use 60% for payroll as opposed to 75%.
Before you apply, read up on the terms of the Flexibility Act to understand exactly what your business needs to do to be forgiven.
3. If you don’t have employees, you do have options
Solopreneuers, independent contractors, and those who are self-employed do qualify. Check out the below article for more details:
What You Can Do if You Haven’t Applied Yet
If you haven’t already applied for a loan, here are some things you should be aware of:
Use a local bank if you can
As we mentioned previously, local banks are your best bet so prioritize working with one. Reach out to them asap to see if they’re accepting applications this time around.
If you don't work with a local or regional bank already, the SBA Lender Match tool can help you find providers in your area.
Apply asap
Don’t wait for the last minute, especially if you have to apply with a lender you don’t already have a relationship with.
To get started, reach out to a lender or your accountant or review the application.
Have a question? We have over 50,000 accountants on Alignable ready to jump in. Post a question here to get started.
PPP is only one option
If you’re not going to apply for PPP, that’s okay, too. Just don’t forget that other relief is out there. Here are some things to take advantage of:
- Apply for an Economic Injury Disaster Loan or Advance
- Defer tax deposits and payments
- Use the credit for retaining employees
- Increased deductions for interest expense
Get Started Before It’s Too Late
If your business is hurting and hasn’t yet applied for PPP, now is the time to do so. Despite the issues with the PPP in general, the updated terms and extension make it worthwhile to apply. So get started now and let us know how we can help.
Are you planning on applying for the PPP? Have you received funds already? Let us know your thoughts and any questions you have on the process in the comments.
For more about the PPP, Flexibility Act, and funding your business, check out the below reads:
- Businesses Without Employees Qualify Too
- PPP Updates: What the Flexibility Act Means For Your Loan
- Yes, Senator, Small Businesses Do Need Help To Survive the Pandemic
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Members Share: Essential Financial Advice to Help You Rebuild
Comments (1-10)
We filed for EIDL back in 4/12 and still haven't received. In "process still", requested documents in May, provided, still nothing.
We filed for PPP in early June and are waiting on our lending person to get documents to our loan source. Still nothing.
I hope the encouragement for people to file new claims doesn't dry up all the sources for small business owners who DID file earlier and are still waiting. It's disheartening to see such large corporations get multi-million dollar payouts, especially those that still closed and didn't keep people employed. I hope they don't dry up more of the funds in large chunks because small business owners like us, especially a women owned, hispanic minority, vet owned business, like us, that has been open for just over 2 years that doesn't have the capital built up for rainy day/coronavirus funds.
We won't survive much more than a month if no relief is in sight.
I'm one of the lucky ones. I applied for the EIDL grant and got approved. Actually, I didn't get an approval email until about a month AFTER the funds were deposited into my account. When they were deposited, I had almost forgotten that I applied since there had been no communication since my original filing.
As for the PPP, I applied for and got that as well. It was a lifesaver. It would have been nice to know from the beginning that the funds could be used for 24 weeks instead of just 8, as I would have stretched them out a little more. But that's water under the bridge...
A second round of funding would be awesome. Opening at 50% capacity is tough...plus there's the fact that many people still do not feel safe going out to eat. Having a "cushion" would be nice. I'll probably *scrape by* without it, but am anxious to see if something else gets passed.
Best of luck to everyone!
This is a very helpful guide for small businesses living through COVID 19. Thank You for the information.
We filed for EDIL and was denied. The reason was really unclear. How can we find out why we were denied? Should we reapply and/or is that assistance still available ?
The funds were a great help! Hoping for another round but I thing we can get by if another round is not offered.
I havent applied for any loans, thought it was all scam and could never happen to a small business in actual need . Soo many sb need this working capital but are still waiting . Is there not a way to fasttrack these monies ? Now in need , what are options at this point to stay in business with this money myth promised but not received by business owners. I surely do not want to jump in front of somebody that has already applied and it brings me grief to see that they are still waiting so why should I apply now well if I don't there will be no business what is the help what is the real help instead of myth fake news promises that can be obtained now
The most helpful resource for me was MoFi in Missoula. I highly recommend them for your PPP needs and questions.
I rec'd a "small" SBA Loan which took about two months+ to get approved. I don't even know through which Bank! I am a Sole Proprietor Living on Commissions only. Should/could I apply for additional funds?
This is very helpful information.
From what I understand from the person I spoke to at the SBA for the disaster loan or advance program, and when you get the loan you also receive an additional $1k that does not have to be paid back, but the 12,800 loan does, and in fact although states it does not have to start being paid back for a year, it does start to accumulate interest from the day you receive it till it is paid back in full. Also, in order to pay it back you have to send a certified bank or treasury check to an address in Texas...no wire transfer even though that is how you receive the money from the SBA. I thought under these circumstances the risk and limitations were not worth the loan, even though I was approved by the SBA for it. If anyone else has anything contrary, I would love to hear it. Best, Jim