Tag Archives: Paycheck Protection Program

This Proposal Would Allow Businesses to Get another PPP Loan

Congress has expressed interest in approving the next round of Paycheck Protection Program (PPP) loans. If this happens, small businesses can expect a wave of help coming their way. Following the approval, The Prioritized Paycheck Protection Program (P4) Act is a source of funding for small businesses. Businesses that employ less than 100 people can apply for aid through this program.

However, to be eligible for a second PPP loan, the business must have its first PPP loan entirely spent or near exhaustion. Moreover, they should display a 50 percent loss of revenue amidst the COVID-19 pandemic crisis.PPP paycheck protection program

Small businesses are hopeful that conditions on a second round of PPP funding are not too restrictive.

According to Senator Ben Cardin (D-Maryland), small businesses are facing a tough time, and will continue doing so for the near future. He urged Congress to take immediate action to help the businesses deal with the situation in the most efficient way possible. The lawmakers were quick to realize that the lockdown has been severely affecting small businesses. As the lockdown continues, it will continue to impact the small business community negatively. Hence, the approval is necessary for the second wave of PPP loans.

Cardin, the Small Business Committee‘s ranking member alongside other senators, Jeanne Shaheen and Chris Coons, put forward the bill before the Senate. In the House, U.S. Reps. Antonio Delgado (D-New York) and Angie Craig (D-Minnesota) have introduced a similar bill. Coons, a senator from Delaware, mentioned that the Paycheck Protection Program will enable many employers to seek federal aid. He also added that regardless of the closures coming to an end, numerous Delaware businesses would struggle to survive the damages caused by the recent COVID-19 crisis. The senators will initiate the plan in the upcoming Small Business Committee. The Treasury Secretary Steven Mnuchin assured the senators and expressed his open-mindedness for the idea.

It is important to mention that publicly traded companies won’t be eligible for the loan. Additionally, hospitality and lodging businesses chains can only access to a total of $2 million in loans. The legislation’s topmost priority is smaller businesses, particularly those in the restaurant and hospitality industries, as they have been affected most brutally during this pandemic crisis. The rest is for employers with fewer than ten staff members and businesses in rural areas. On the other hand, Kevin Kuhlman, Vice President of Federal Government Relations (NFIB), states that the 50 percent revenue loss is unreasonable, and it might stir conflict amongst many of its members.

According to him, if a business has had 25 percent or 30 percent revenue loss and not entirely 50 percent, they would still be faced with an existential threat, and their struggle should not be discounted, considering their high fixed costs and money owed to vendors.

PPP Funds Still Available yet Applications Slowing Down [2023 Update]

PPP funds disappeared in as little as 2 weeks when first released. The relaunch occurred on May 11, allowing more small merchants to take advantage. But, today the funds still exist and applications for the help are slowing down.

What are PPP Funds?

If you haven’t heard, PPP funds or the Paycheck Protection Program is a Small Business Administration Program providing small businesses with financial relief. The program gives employers an incentive to keep employees on payroll rather than letting them go.

With PPP, employers must keep employees on payroll for 8 weeks during the pandemic. The employer must also use the funds for payroll and other important bills, such as rent, mortgage, or utilities. The PPP funds should help keep the business running and employees off unemployment. In other words, it’s an attempt to keep your business open.

Why are Applications Down?

Many small merchants figured out their plan by now. They had their moment of panic when the PPP emptied within 2 weeks, leaving millions of businesses wondering ‘what now?’ That moment is gone. Businesses have done one of two things:

• Closing up shop and cutting their losses
• Created a plan to adapt to the current economy, change their offerings, and move forward

Many businesses think the Paycheck Protection Program has too many ‘unknowns’ and/or requirements. Yes, the loan may be forgiven, but only if you meet strict requirements. Many small business owners wonder if they met those requirements. What if things change?

ppp merchants loan covid-19 coronavirus

PPP is a program designed to assist merchants with maintaining payrolls through COVID-19

Worse yet, if you don’t apply for forgiveness, you must repay the loan. Many small business owners don’t want this extra load on their shoulders right now.

Are Small Merchants Coming Back?

As economies open up, with Georgia one of the first, business owners wonder if they should come back too. Is the largest worry over? Are consumers ready to spend money again?

All small merchants agree on one thing – we have to start somewhere. This may be why PPP applications are down. Business owners don’t want a bailout – they want to get back to doing what they love and that’s serving customers. If they delay things, take PPP and take their time planning, they may miss the boat.

The businesses that put their neck out there and tried it may succeed, leaving those that took the PPP in the dust. Is that where you want to be? Would you rather test the waters and slowly make a comeback on your own? Do you want government regulations breathing down your neck or do you want to reopen your business at your pace, doing what you’re comfortable doing?

PPP is a great opportunity for those that need it, but the numbers show that’s not a lot anymore. Small merchants want their business back. They don’t want another potential debt on their back that they can’t repay. It’s time for businesses to make a plan and see where they go.

Lenders Dealing with Emerging PPP Loan Fraud

PPP paycheck protection programLast month, a bank in Rhode Island bank was given an application for a $144,050 loan through the Paycheck Protection Program (PPP). PPP is an enormous federal effort that is designated to assist many small businesses that are severely affected by the Coronavirus pandemic. This PPP loan application was made on behalf of a restaurant located in Warwick, R.I. with about 18 staffs boasting an average monthly payroll of a $46,000.

Many suspicions arose after a bank official drove past the building, indicating that the restaurant had been closed before the pandemic. Many dumpsters were seen on the property, and notices ordering the halting of business were seen posted on the door and windows. This formerly popular restaurant had been shut down two years ago and federal prosecutors recently charged two men with conspiracy to commit bank fraud.

The case was the first criminal fraud prosecution related to the Paycheck Protection Program. Industry officials caution that it will likely be one of many charges related to this program. Banks are working hard to tackle misconduct in the $660 billion program, one former official calculated that fraud rates may be as high as 10% to 12%. Derek Cohen, a former federal prosecutor who currently represents white-collar defendants at Goodwin Procter, stated that the rate of fraud increases when government relief programs are assembled rapidly in response to any disaster.

A few weeks ago, many banks started accepting applications from new small business customers. Towards the end of March 2020, the Coronavirus relief law (CARES act) was enacted as the economic destruction caused by the pandemic spread. This law requires the SBA to register loans with the use of Taxpayer Identification Numbers (TINs) in order to stop the same borrower from receiving more than one SBA loan, an issue known as loan stacking.

Immediately after the loan has been submitted, the SBA’s E-Tran system gives a specific application number to the lender that is assumed to reduce most of the dangers of duplicate applications. Meanwhile, questions have arisen about the SBA’s system for examining taxpayer ID numbers. It is theorized that it is possible for fraudsters to manipulate the system and engage in loan stacking.

Recently, the Office of the Comptroller of the Currency held a feedback session with bankers concerning fraud in PPP. Most participants talked on condition of anonymity and stated that there remained a host of problems, such as fraudulent documents and payroll verification. In the course of securing Paycheck Protection Program (PPP) funds, small businesses have encountered difficulty, distress, and an absence of clarity on the rules of the program. The procedure was chaotic for lenders too, leaving the program exposed to fraud amidst an unprecedented SMB stimulus struggle. The urgency with which these lenders were expected to get applications and provide funding created opportunities for fraudsters to take advantage.  Time will tell how many fraudulent applications are caught and prosecuted, but while not perfect, the PPP has provided much needed relief to many small businesses.