COVID-19 Funding

Late last night Congress approved a long-awaited second COVID-19 economic stimulus package that provides over $900B in needed relief to individuals and support for businesses. While the most reported aspect is the $600 stimulus checks for individual taxpayers, it is important not to overlook the expansion and changes to the popular Paycheck Protection Program (PPP). Many Atlanta businesses that received a loan have been eagerly awaiting an update.

When the Small Business Administration (SBA) announced in late October that it will introduce a new Loan Necessity Questionnaire it created concerns about loan forgiveness eligibility. Borrowers with loans of $2M or greater are required to complete either SBA Form 3509 or 3510 depending on whether the borrower is a for-profit business or a nonprofit organization. The purpose is to help the SBA determine, for loan forgiveness purposes, whether the good faith certification about economic necessity made the loan necessary to support ongoing operations. Unfortunately, there were no comments or guidance issued when the announcement was originally made leaving the 42,000 impacted borrowers with more questions than answers.

2020 has been a year of unique events and unexpected outcomes. For many, the pandemic has forced them to take things one day at a time. This is especially true for Atlanta businesses that have taken a loan through the Paycheck Protection Program (PPP). Since the PPP was launched as part of the CARES Act in March, there have numerous changes and updates including 2 separate frequently asked questions (FAQs) documents published and 26 interim final rules.

The challenges created by the COVID-19 pandemic have been especially difficult for Atlanta mid-sized businesses. The almost overnight changes from “business as usual” to stay at home orders and forced closures meant a significant drop in revenue. The businesses hit hardest include retail, transportation and warehousing, employment services, tourism, and entertainment/recreation.

The popular Paycheck Protection Program (PPP) is back in the news again as the Small Business Administration (SBA) is seeking formal approval from the Office of Management and Budget (OMB) to collect loan necessity information. The questionnaires include SBA Form 3509 (nonprofit organizations) and 3510 (for businesses) are designed to obtain more detailed information about loan necessity from borrowers who received loans greater than $2M.

It appears the Paycheck Protection Program (PPP) is back in the spotlight as the Small Business Administration (SBA) continues to issue guidance and updates on loan forgiveness. The shift breaks months of silence about forgiveness, the application process, and when borrowers should start applying. Many Atlanta businesses have been in a holding pattern on forgiveness because it was expected more changes would come.

On October 8, 2020, Treasury issued a new Interim Final Rule (IFR) which introduced a Simpler Loan Forgiveness Application for borrowers with loans less than $50,000. The purpose of the change is to make the application and loan review process faster and result in the timely issuance of forgiveness funds. In addition, the IFR also provides an exemption in the forgiveness amount resulting from reductions in full-time equivalent (FTE) employees and salary/wages.

The good news for DeKalb County businesses is there is a new business loan program, with a loan forgiveness feature, which will soon begin accepting applications. The DeKalb Better Business Loan Program offers qualifying businesses experiencing financial difficulties due to the COVID-19 pandemic access to low-interest loans. Like the PPP, borrowers are required to use loan proceeds to pay certain business expenses including payroll, business interest, rent, utility, and other business-related debts.

The Paycheck Protection Program (PPP) has been an essential source of funding and capital for Atlanta businesses working through the COVID-19 pandemic. Although the program’s popularity seemed to dwindle in recent weeks, the Small Business Administration reported that over 174,000 loans totaling $14.6B have been issued to Georgia companies.

Managing through the unknown is not an easy task, but it is a challenge that Atlanta business owners have been forced to accept. The stay at home orders and forced business closures implemented earlier this year dealt a crippling blow to the economy. In order to stay solvent many slashed jobs and made other cost-saving measures. When searching for a lifeline many decided to apply to the Paycheck Protection Program, (PPP) because of the favorable terms including a forgiveness option.