WASHINGTON D.C. – U.S. Treasury Secretary Steven T. Mnuchin and SBA Administrator Jovita Carranza announced today that extra measures have been put in place to provide small business owners with loans issued through the Paycheck Protection Program (PPP).
A number of issues have surfaced since PPP became available as relief opportunity to business owners who are suffering economically due to COVID-19. The loan program has recently come under fire when publicly traded companies such as Shake Shack received $10 million and large organizations like the Los Angeles Lakers secured $4.6 million in aid. Both organizations said they would return the funds.
“We have noted the large number of companies that have appropriately reevaluated their need for PPP loans and promptly repaid loan funds in response to SBA guidance reminding all borrowers of an important certification required to obtain a PPP loan,” said Mnuchin and Carranza in a jointly released statement. “To further ensure PPP loans are limited to eligible borrowers, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Regulatory guidance implementing this procedure will be forthcoming.
In addition, to complaints of larger organizations getting funding, Forbes reported on Monday that as the second round of lending kicked off with “$310 billion in fresh funding, complaints of processing delays and computer glitches began to surface almost immediately as the program was overwhelmed by a flood of demand yet again.”
However, the Treasury Department and SBA said, “We remain fully committed to ensuring that America’s workers and small businesses get the resources they need to get through this challenging time.”
PPP provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits, and will also be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Regulatory guidance implementing the new procedure will be forthcoming.