Leading up to today’s first opportunity that businesses may apply for relief through the Paycheck Protection Program, U.S. Treasury Secretary Steven Mnuchin has made last minute announcements regarding Program loans.
Originally, SBA had indicated in its guidance that the PPP loans would be .5%. The Treasury Secretary announced late yesterday the PPP loans will have an interest rate set at 1%, in an effort to assuage lender concerns.
Also, the Treasury Secretary indicated that the loan funds would be issued on the “same day” that the loan is approved. Lenders are responsible for verifying that: (1) a borrower was in operation on February 15, 2020; (2) a borrower had employees for whom the borrower paid salaries and payroll taxes; and (3) the dollar amount of average monthly payroll costs. Lacking specific guidance, some lenders have advised Treasury they will only process applications for current customers, greatly limiting the purpose and potential of the Program. Lending institutions were still negotiating with Treasury late yesterday, even as SBA was issuing final guidance. Lenders have indicated possible delays for approval and funding.
The administration announced late yesterday it was streamlining borrower verification requirements for the banks and adjusting the terms of the loans to make them more palatable, but it was unclear if the last-minute changes coming Thursday night would be enough to avert a chaotic rollout.
“UMA is urging our Members to share their experiences so we can keep Congress apprised of the progress,” said Ken Presley, UMA Vice President, Legislative & Regulatory Affairs & Industry Relations/COO.
Businesses and sole proprietors may begin applying for the PPP loans beginning today. “It is anticipated there could be considerable confusion considering the pace in which the program has been rolled out; however, we encourage operators to press on,” Presley said.
Independent contractors and self-employed individuals may not apply until Friday, April 10, 2020.
The PPP loans are being handled by existing SBA lenders or through an array of federally insured depository institutions.
Since the loan amount is based on payroll costs, transportation companies will need to provide documentation of their payroll costs with the loan application.
The PPP loan program offers loan forgiveness up to 100% of the loan amount. Payroll costs, mortgage interest, rent, and utilities payments made in the eight weeks after getting the loan may be forgiven.
The deadline for submitting PPP loan applications is June 30, 2020; however, there is a limited amount of funds ($349 billion) for the PPP loans, so bus and motorcoach companies are encouraged to apply today.
UMA urges Members to share their experiences so we can keep Congress apprised of the progress.