On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law providing, among other relief, up to $349 billion to fund loans to small businesses affected by the outbreak of COVID-19 (the “PPP”). On April 24, 2020, funding for the Paycheck Protection Program was reauthorized in the amount of $310 billion when the President signed H.R.266 – the Paycheck Protection Program and Health Care Enhancement Act into law. On June 5, 2020, H.R – 7010 – the Paycheck Protection Program Flexibility Act of 2020 (the “PFA”) was signed into law by the President.
The PPP was originally set to expire on June 30, 2020 thereby closing the door to borrowers to obtain forgivable loans from the over $130 billion in remaining funds. However, in response to an ever-growing onslaught of new Covid-19 cases across the country which have caused a delay in the reopening process or the rolling back of existing reopening measures in many states, Congress unanimously passed legislation and the President signed same into law on July 4, 2020, thereby extending the application deadline through August 8, 2020. This is great news for borrowers that have yet to apply for a PPP loan!
The PPP continues to be an evolving program with new rules, guidance, and changes being frequently made. It is advisable that borrowers of PPP loans refrain from submitting their application for loan forgiveness until all open questions (which there are many) concerning the forgiveness applications have been adequately addressed through the issuance of rules and guidance from the applicable authorities.
We are closely monitoring this continually developing area and will keep our clients updated as the Paycheck Protection Program progresses. We encourage our clients to reach out not only to us, but also to their local lenders with any questions that they may have regarding the economic assistance programs available.