powered by LeadingAge New York

PPP Deadline Approaching

The Paycheck Protection Program (PPP) is a forgivable loan program administered by the Small Business Administration (SBA) through local financial institutions. It incentivizes small businesses (generally 500 employees or less), including not-for-profits (NFPs), to keep their workers on the payroll. PPP applications can be filed until June 30, 2020.

There was an initial run on PPP funding, but Congress allocated an additional $310 billion to the program. Since that time, demand has slowed considerably, and there is over $128 billion in funding authority available as of this writing.

Under the PPP, the SBA allows qualifying small businesses to borrow up to 250 percent of their average monthly payroll costs, up to $10 million. NFPs with less than 500 total workers (including part-time and occasional employees), including any of their affiliated entities, are eligible to apply. Loans are unsecured, and payments are deferred for six months. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining their salary levels. For loans issued before June 5, 2020, the unforgiven portion has a maturity of two years; for those issued after that date, the term is five years. All loans have a very competitive interest rate of 1 percent.

The SBA and the Treasury Department recently released a revised loan forgiveness application implementing an extended “covered period” and a reduction in the proportion of costs that must be payroll from 75 percent to 60 percent to be eligible for loan forgiveness. A new “EZ” version of the loan forgiveness application and accompanying instructions were posted last week, and many LeadingAge NY members should be able to use the new EZ application.

PPP applications can be filed until June 30, 2020. Health care and related services has been the single most active industry segment in loans to date.

For more information, consult with the SBA’s PPP webpage, the LeadingAge NY guide on coronavirus funding opportunities for NFP providers, and a presentation on the PPP from LeadingAge NY associate member The Bonadio Group given at our June 12th Chief Financial Officers Council meeting.

Contact: Dan Heim, dheim@leadingageny.org