by Megan Roberts, Extension educator
The Paycheck Protection Program (PPP) roller coaster ride continues as Congress issued yet another update to the program over the July 4 holiday week. Based on old laws, PPP expired on June 30, 2020. But just before midnight on the 30th, Congress passed an extension called the Paycheck Protection Program Extension Act, S. 4116. The president signed it into law on July 4, 2020. The new law extended the application deadline for PPP another five weeks to Saturday, August 8, 2020. Due to the last minute timeline, lenders and the Small Business Administration (SBA) had stopped taking applications for six days, but as of July 6 at 8 am CST, SBA resumed taking new PPP applications from lenders.
The Paycheck Protection Program (PPP) roller coaster ride continues as Congress issued yet another update to the program over the July 4 holiday week. Based on old laws, PPP expired on June 30, 2020. But just before midnight on the 30th, Congress passed an extension called the Paycheck Protection Program Extension Act, S. 4116. The president signed it into law on July 4, 2020. The new law extended the application deadline for PPP another five weeks to Saturday, August 8, 2020. Due to the last minute timeline, lenders and the Small Business Administration (SBA) had stopped taking applications for six days, but as of July 6 at 8 am CST, SBA resumed taking new PPP applications from lenders.What does this mean for farmers and other small business owners?
If you have not yet applied for PPP, now is the time. PPP loans fund 2.5 months worth of a small business's payroll expense and/or owner’s compensation. A business owner applies for PPP through a participating lender. Many banks, credit unions, and the farm credit system are participating. If you do not have employees but have a positive net income on your 2019 Schedule F or C, you can apply through a lender for 2.5 months worth of equivalent owner's compensation to help recoup 2020 losses. If a borrower uses at least 60% of the loan on payroll or owner’s compensation and any remaining funds on eligible business expenses, then the borrower can apply to have the loan forgiven after the conclusion of the loan’s 24 week covered period. If the borrower exhausts their loan funds before the 24 weeks, they may be able to apply for loan forgiveness earlier. As of June 30, SBA--in coordination with participating lenders--had issued over 4.8 million PPP loans worth over $520 billion dollars. While $520 billion worth of loans issued is staggering, about $130 billion in PPP loan funds remained unused at the end of June. The large amount of unused allocation helped create the momentum for Congress to issue the deadline extension, allowing small businesses, including farmers, that haven’t yet applied for PPP to access the remaining dollars by August 8, 2020.