On Friday, President Donald Trump signed legislation that replenished funding for the federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). The $484 billion aid package includes $310 billion for the PPP, $50 billion for EIDLs, and $10 billion for EIDL grants.
Many firms were caught in the middle of the loan application process when funding ran dry for the PPP program. The Small Business Administration (SBA) began accepting new applications for the PPP at the beginning of the week. Despite the additional funding for EIDLs, the SBA is not yet accepting new applications for the program. If companies were in the process of applying for an EIDL loan and have an application number beginning with the number “3,” the application remains in the queue and there is no need to reapply for a loan.
The PPP originally was allocated $349 billion as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES) act, but funds were depleted within two weeks after the program opened on April 3. The construction industry led all other subsectors with nearly $40 billion in loan approvals across more than 114,000 applications in the first two weeks of the PPP.
The Associated Builders and Contractors (ABC) applauded the additional PPP funding allocation in the relief package.
"PPP loans have served as a vital lifeline for more than 177,000 small businesses in the construction industry, and this additional funding will help ensure that ABC members have the liquidity and resources needed to remain in business and provide pay benefits for hardworking U.S. workers," vice president of legislative and political affairs Kristen Swearingen said in a prepared statement.
Stephen Sandherr, CEO of the Associated General Contractors of America (AGC), said the new legislation will help protect thousands of construction jobs.
Under the PPP, small businesses—companies with 500 employees or fewer—can apply for partially forgivable loans that can cover operating expenses. Borrowers can apply for loans up to 2.5 times the company's monthly payroll costs for the period between February 15, 2020, and June 30, 2020, or $10 million, whichever is smaller. The portion of a PPP loan used to cover the first eight weeks of payroll, interest on mortgages, rent, and utilities can be forgiven. Forgiveness is also contingent upon employers maintaining or quickly rehiring employees and maintaining salary levels.
Businesses can receive a $10,000 cash advance within three days of applying for an EIDL of up to $2 million. The advance under the program does not need to be repaid and may be used to keep employees on payroll, pay sick leave, meet increased production costs, or pay business obligations.
