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CARES Act 2.0, Main Street Lending Program, and Additional Guidance on All PPP Loans

Time to act is now for economic stimulus loans

If you missed your chance to receive a loan for your business under the original CARES Act, you have another chance. CARES Act 2.0 adds additional dollars to the Paycheck Protection Program and the Economic Injury Disaster Loans. However, once again, demand for the loans is expected to significantly exceed available dollars. Act immediately if these funds could help your business.

CARES Act 2.0

Paycheck Protection Program (PPP)

The original $349 billion allotted to the PPP ran out after 14 days. This next round of funding adds another $310 billion to the PPP loans for small businesses.

For Those Who Applied but Did Not Receive Funding

If you did not receive money before the original funding ran out, the good news is that you can try again. Check with your bank immediately to make sure that your loan application is complete and ready to submit. Confirm the planned and actual submission date to the SBA.

For Those Who Have Not Applied

If you did not apply for a PPP loan yet, act quickly. The original program had many more applicants than available dollars . Talk to your bank immediately to make sure they will participate in the PPP. Gather the records needed and complete your application quickly. Closely monitor the loan status and submission with your bank.

Economic Injury Disaster Loans (EIDL)

The CARES Act originally funded this loan program with $10 billion, which ran out quickly. CARES Act 2.0 will add another $60 billion, including $10 billion earmarked for the loan’s grants.

For Those Who Applied but Did Not Receive Funding

The SBA is still processing existing loans on a first-come, first-served basis. You can monitor the status of your loan on the SBA portal if you applied online or by calling the SBA at 1-800-659-2955.

For Those Who Have Not Applied

If this is the loan type you are interested in, make sure you have your records ready to allow you to apply quickly. Continue to monitor the news and the SBA website to see when new applications will be accepted.

Main Street Lending Program (MSLP )

This program is intended for small and mid-size businesses (10,000 employees or fewer rather than the 500 employees of the other programs), and the minimum amount for these loans is $1 million. Businesses can participate in the program either through an existing Main Street Loan Facility or via a new loan.

You can find additional details on this program and its rules in this business guide from RSM US. As a member of the RSM US Alliance, LaPorte has access to lessons learned and best practices from RSM US, a leading provider of audit, tax, and consulting services to the middle market.

If you are interested in applying for this loan type, talk to your bank to determine if they are participating in this program.

Additional Guidance Regarding Qualifications and Certifications for PPP Borrowers

On April 23, 2020 the Small Business Administration published additional guidance regarding qualification for and certifications required by the Paycheck Protection Program which was established by the CARES Act. The guidance requires corrective action to be taken if necessary by May 7, 2020. The additional guidance was issued in the form of an new question added to the Paycheck Protection Program Loans Frequently Asked Questions and is reproduced in its entirety below:

Question 31: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.

What’s the Right Move for My Business?

Along with learning more about the loan programs themselves, review your financial statements and tax situation. If you are not sure which of the loan programs is better for your business or become mired in the application process, contact your LaPorte advisor for assistance. You may also want to visit the LaPorte Coronavirus Resource Center for additional guidance.


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