As you are no doubt aware, last Thursday the Small Business Administration announced that the funds allocated for the Paycheck Protection Program (the “PPP”), some $349 billion, had been fully allocated. According to news reports, Congressional leadership and the Administration, represented by Treasury Secretary Mnuchin, are close to approving an expansion of the program. As reported, another $310 billion of funding will be made available for PPP loans; the new funds could be approved as soon as this Wednesday, April 22.
How soon new loan disbursements could take place is as of now unknown. We are unaware of any changes in the PPP as to who is eligible to apply, limits on the use of funds in order for the loans to be forgivable, and the other elements of the program as it was already in place. The PPP is generally reviewed in our earlier article, “The Paycheck Protection Program: Answers to Your Questions.”
If your company was successful in acquiring a PPP loan on the first iteration of the program there is nothing new that you need to do. The new funding does not increase the amount you can borrow.
But if your company was not successful in receiving a PPP loan, with this new funding you can try again. Here are a few thoughts on what you should be doing now, even before the new funding is appropriated by Congress:
• If you submitted a PPP loan application to your bank and it was not approved before funding ran out, contact your bank now. Ask whether you should submit a new application, or will they reinitiate the loan review based upon what you have already submitted. Some banks have already indicated that they will pick up the process on applications in the queue, while others are going to start the process over with newly submitted applications. Find out what your bank is going to do.
• If you submitted a PPP loan application and were responding to questions from the bank or were collecting additional supporting information, you might have stopped those efforts when you heard the funding was exhausted. Now is the time to return to those questions. If your bank is holding your prior application and will proceed with it, get those answers and additional information ready and find out how and when the bank wants that information delivered. Alternatively, if your bank is requiring a new application, incorporate the answers to the bank’s questions into your new application.
• If you need to submit a new application to the bank, ask them when they will begin accepting new applications (FYI, the first iteration of the PPP set a date before which applications could not be accepted; whether a similar limit will be imposed as part of the new funding remains to be seen).
• If you did not submit a PPP Loan application in the first phase of the program, consider whether you want to apply in the second round. If you do, start now to complete your application and collect the necessary supporting materials. Also, reach out now to your bank to ask questions and learn what you can that will facilitate a successful application in this second round of the PPP.
Stoll Keenon Ogden understands that these are trying times for our clients and our country. Our firm operations have continued uninterrupted and our attorneys are equipped to serve as we always have – for more than 120 years.
Please also be sure to consult the Stoll Keenon Ogden Coronavirus Resource webpage for additional articles and information related to the latest information on new laws and directives enacted by federal, state, and local governments in response to the Coronavirus pandemic.
