Please ensure Javascript is enabled for purposes of website accessibility

There's More PPP Funding -- but You'll Need to Act Quickly to Get It

By Maurie Backman – Apr 29, 2020 at 6:46AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Attention, small business owners: Don't miss the chance to get some much-needed relief.

Though COVID-19 has hammered the U.S. economy on a whole, small businesses have taken an exceptional beating. As part the CARES (Coronavirus Aid, Relief, and Economic Security) Act, lawmakers initially allocated $350 billion to small business owners in the form of PPP loans. Short for Paycheck Protection Program, these loans are specifically designed to help businesses retain employees, or rehire those who were initially laid off. The best part? These loans are completely forgivable, provided business owners use 75% of their proceeds or more to cover payroll costs.

On Thursday, April 16, however, the program officially ran out of money, leaving countless small business owners in the lurch. Thankfully, a second round of funding was approved late last week, funneling over $300 billion into the program -- almost as much as its initial seed money.

Man hanging sign in shop window saying sorry we are closed

IMAGE SOURCE: GETTY IMAGES.

If you missed the first round of funding, it pays to submit a PPP loan application as quickly as possible. But don't delay -- that $300 billion cash infusion is expected to run dry as quickly as the initial round of PPP funding, which means the more you delay, the more you risk getting left out in the cold.

Technical glitches and hiccups galore

A second round of PPP funding was supposed to be good news in theory, but many small business owners came away from the application process just as frustrated as they did the first time around. For one thing, the Small Business Administration's system for processing loan applications reportedly experienced technical difficulties earlier in the week, leaving some lenders with a lag in submitting applications. That puts a large number of small business owners at a real disadvantage, since funding is dished out on a first come, first served basis.

Also, since so many banks were left with backlogs from the first round of funding, it stands to reason that those applications will be processed before new applications are considered. In other words, if you didn't apply for a PPP loan during the first go-round, you may need to wait in a serious line.

Furthermore, while banks are trying to communicate updates to nervous small business owners anxiously awaiting the results of their applications, many are overwhelmed and are, as such, limiting communication to generic messages. Other small business owners are being told that their PPP applications have been received, but that they're waiting in a queue with more than 100,000 applicants ahead of them. Talk about frustrating.

Will there be a third round of PPP funding?

Since there's talk that the second round of PPP funding will disappear just as quickly as the first round, many small business owners are wondering whether follow-up funding is in the cards. Right now, talks of additional funding are mostly speculative, though one thing to keep in mind is that PPP loans themselves are only designed to cover an estimated two-and-a-half months of payroll costs. If the COVID-19 crisis keeps the economy shut down well into the summer months, many businesses that received funding during the first round could easily blow through that cash by then, thereby creating a need for additional help.

Of course, it's too soon to tell when the economy can open back up on a large scale, but if your business is struggling now, drop what you're doing and submit a PPP application if you haven't done so already. Doing so could save your business at a time when so many run the risk of closing their doors on a permanent basis.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.