The current financial crisis due to COVID-19 has left many people unemployed, feeling frustrated & helpless in a time of extreme vulnerability. So, 23ABC is dedicated to helping individuals and businesses rebound. 23ABC's Daniela Garrido breaks down new changes for businesses using the Payment Protection Program.
Last Friday President Donald Trump signed into law the Payment Protection Program Flexibility Act. This new legislation does exactly what it says: provide flexibility to businesses using the loan.
So far the program has provided $510 billion in funding to businesses and has allowed them to continue paying their employees throughout the pandemic. Because of the fast nature of the pandemic, the program had a couple of loopholes that needed to be addressed through the Flexibility Act.
"There are some more safe harbor rules that come out and make it a little bit easier for borrowers that are having difficulty reaching their pre-COVID-19 levels of employment," explained Kelly Bearden of the CSUB Small Business Development Center.
Some of those safe harbor changes include extending the length of the loan from 8 to 24 weeks. This is an option for any business that received the loan before June 5th.
Another major change is that it reduced the amount of the loan that needs to go to salaries from 75 percent to 60 percent.
Allowing businesses to use the rest of the money on mortgage payments, rent, utilities.