The Paycheck Protection Program (PPP) is a federal loan designed to provide a direct incentive for small businesses to keep workers on the payroll. The loan is forgiven if businesses retain employees and use the money for rent, mortgages and to keep the lights on.
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It took less than two weeks for a deluge of applications to exhaust the previous allotment of loans.
Businesses received some $349 billion of the PPP loans in the first round of funding as the SBA processed 14 years’ worth of loans in less than 14 days. Nearly 5,000 leaders participated in the previous round.
The second round of federal stimulus funding appropriates $320 billion to the PPP.
You can apply through any existing SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union and Farm Credit System institution.
However, the program has seen increased scrutiny as a number of large, publicly traded companies and even big universities tapped into the funds.
In recent days, Harvard University and public traded companies such as AutoNation Inc., Ruth’s Hospitality Group Inc., Shake Shack Inc. and others agreed to return PPP funds they received, according to SEC filings and national reports.
Now borrowers are expected to “certify” that they need the money.
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“Borrowers still must certify in good faith that their PPP loan request is necessary,” the SBA said last week. “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.”
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