By Justine Lara Konicki & Kyle Stroup
The Paycheck Protection Program (PPP) will expire on Saturday, Aug. 8, 2020. After this deadline, businesses in need of funds to continue to pay their employees during the COVID-19 pandemic will need to explore other options. Indeed, while the SBA has a reported $130 billion left in PPP funds, it is unlikely that the program will be extended past the Aug. 8 deadline.
It has been reported that a program similar to PPP may be implemented in connection with Congress’ continued negotiations over the next round of stimulus, but nothing is guaranteed. While Congress is negotiating this new “Continuing Small Business Recovery and Paycheck Protection Program,” the program (if implemented) will likely contain different, and possibly more stringent, requirements. And no final bills that have a chance of becoming law have been circulated or passed by Congress.
Thus, PPP-eligible businesses should consider applying for a PPP loan now, while the current program is still operational. This is especially true because, although the legislation is not final, it may be possible for a business that took a PPP loan to still qualify for aid under the bill currently being negotiated. Companies eligible for PPP should consider not waiting for the next round of aid.
Further, even if Congress enacts a new program, the roll out of the PPP application process and overall program was hardly without issue or controversy. Regulations have changed over time and the SBA has issued some inconsistent guidance, with FAQs still being issued. Accordingly, companies should consider applying for a program where eligibility and terms are more known, rather than waiting for another program that may face similar hurdles.
But even with the well-reported issues surrounding PPP implementation, the program remains designed to bridge employers through the shutdowns caused by COVID-19, and the loans include forgiveness provisions. As such, a PPP loan is likely to provide more aid to struggling businesses during this pandemic than traditional loans.
Please reach out to Justine Lara Konicki (jlk@kjk.com / 216.736.7211) with any questions you have about the Paycheck Protection Program or other financial relief programs available to small businesses.