President Donald Trump on Saturday signed into law an amendment to the Paycheck Protection Program that gives businesses affected by the coronavirus pandemic more time to apply for federal funds.
The law extends the deadline to apply for the federal government's loan-based relief program to August 8. The original deadline to apply for the loans was June 30, but Congress moved quickly to extend the deadline after around $130 billion was left over from the initial $660 billion pot, NPR reported.
The Senate initially approved the extension on Tuesday with unanimous consent, and the House of Representatives followed suit the next day. Trump signed the bill on July 4, giving potential recipients just over a month to apply for the remaining funds.
As of June 30, more than 4.8 million loans have been approved totaling $520 billion, with the average loan amount around $107,000, according to the Small Business Administration.
Here's what potential applicants should know before applying.
What are Paycheck Protection Program funds
Paycheck Program Funds are federally backed loans that businesses can apply for to help cover expenses and maintain worker levels. Though they start as loans, businesses that meet specific criteria from the SBA can apply to have their loans forgiven so that they don't need to be paid back.
Part of the program is that no fees will be attached to the loans for small businesses, no collateral is required, and repayment starts after six months. Interest rates are also set at 1%, according to the SBA.
Who can apply for Paycheck Protection Program Funds
While the program is intended for small businesses, that title covers more than just family-owned hardware stores and ice cream shops. As Business Insider's Dominick Reuter reported, freelancers and self-employed workers including gig-workers can also apply for funds.
Businesses with more than 500 employees can also access funds if they meet the SBA's size standards. Business owners who are unsure of whether their enterprise counts as a small business can use the SBA's size standards tool, located on its website.
What July and August applicants need to know
Loan applicants completing the process after June 5 are subject to new loan maturity guidelines. The SBA said recipients who applied before June 5 will be subject to a two-year maturity timeline while those applying after June 5 will have a five-year maturity timeline.
Loans are also processed through local banks and lenders to streamline the process as opposed to having the federal government do it. The SBA provides a list of which lenders can process applications for and issue PPP loans on its website.
How to get loans forgiven by the federal government
The SBA's website says loan forgiveness will be based on "employee retention criteria" and only be given if the funds are spent on "eligible expenses." The Payroll Protection Flexibility Act recently amended the program's rules so that only 60% of funds received have to go to payroll expenses in order for loans to be forgiven, as Business Insider's Joseph Zeballos-Roig reported.
Even if borrowers don't use 60% on payroll, they can still apply for partial forgiveness. Businesses seeking this option need to fill out a five-page form that can be found on the SBA's website to apply for forgiveness after reviewing the rules for forgiveness.