AAFCPAs would like to make clients aware that Congress announced today an additional $310 billion in funding for the very popular Paycheck Protection Program (PPP). The PPP was initially introduced by the CARES Act on March 27th, 2020. $60 billion of the additional $310 billion will be allocated to small lenders and community banks. Other items contained in the bill are an additional $60 billion for the Economic Injury Disaster Loan (EIDL) program, $75 billion for hospitals, and $25 billion to expand testing.
The House is expected to approve the measure on or before Thursday.
The PPP provides forgivable loans intended to provide much-needed funding to small businesses impacted by the COVID-19 Pandemic. The popularity of the PPP resulted in the SBA exhausting available funds in just 13 days. This was concerning for many small businesses who missed out on the funding.
What We Advise:
The majority of the first round of funding was on a first-come, first-serve basis, through your local bank. AAFCPAs shares below lessons learned from the first round, and urges businesses to not delay in taking action as the rush to apply begins again:
- Contact your bank as soon as possible. Your banker can put you in the best position to understand what paperwork will be needed to get you in line quickly. Even if your banker is not currently accepting applications, AAFCPAs advises clients to prepare the SBA’s form here.
- Read your existing loan covenants to ensure you are following any previous covenants you have in place. Determine if you need to run cash flow analysis to assess the impact on your leverage calculations, or debt service calculations.
- Do you need board approvals to secure additional debt? If so, coordinate to get that in place now so this does not slow you down.
- Model the impact the PPP funds would have on your operations. Consider what the forgiveness amount might be and put a plan in place to track expenses. AAFCPAs is available for assistance as needed.
AAFCPAs’ COVID-19/CARES Act Task Force has been keeping a pulse on the SBA’s disaster loans program and the many other provisions introduced in the CARES Act. Please contact your AAFCPAs Partner to discuss relief options to consider and how they relate to your specific facts and circumstances.
If you have any questions or need assistance, please contact Courtney McFarland, CPA, MSA at 774.512.4051, email@example.com; or your AAFCPAs Partner.
We are here for you! Together, we will make it through this difficult time of change.