Seeking relief from COVID-19, businesses across the country rushed to apply for PPP and EIDL loans. Today John is providing an update on the current status of those programs, along with some information on a new program for mid-sized businesses, the Main Street New Loan Facility. It’s no surprise that there are still some questions and delays surrounding the PPP and EIDL, but we’ll continue to provide new information as it becomes available.
Hi, John Geraci, managing partner about LGA, wanting to give you a couple of updates this morning as it relates to the loan programs the SBA put out to assist with the COVID-19 pandemic. We’ve been talking a lot about the Paycheck Protection Program and the Economic Injury Disaster Loan program. And so there’s been a lot of tracking of these programs since April 3rd, and we wanted to let you know where they stand. So I’m going to start with the EIDL. The EIDL essentially had a loan element and a grant element and as of today, we actually haven’t heard of any funds moving under the EIDL loan program. Now, there was also a $10,000 grant that you could apply for under that program. We have seen some movement on that. It appears what they’re doing is they’re going to advance businesses who apply $1,000 per employee up to a maximum of 10,000.
So that’s a little different than what we had previously thought. I think a lot of businesses applied assuming that they were just going to get a $10,000 grant. And so even businesses that didn’t have employees, real estate entities were applying, just assuming they’d get a $10,000 grant, we don’t think that’s going to happen. So again, no movement on the actual loan program themselves. It kind of makes sense. There was only 10 billion allocated as opposed to the paycheck protection program, which had 349 billion allocated. So if you think of a million applicants going after each program and there’s 349 billion in one pool and only 10 billion and another, I don’t know that they knew how they’re going to actually allocate such a small pool to such a wide base of applicants. So the Paycheck Protection Program, as you as most of you know, ran out of funding yesterday.
So as of today, the SBA has actually shut off their site. They’re not actually taking any more applications that banks try to submit. But most of the banks are still encouraging their borrowers to submit the applications, get all the documentation in because we are anticipating additional funding. So the numbers I’m hearing as of today is about 250 billion is sort of the next traunch that they are looking to get into this program. We do think it’s gonna move fast. A lot of the smaller banks have been putting in their applications all along in a more manual process. A lot of the larger banks didn’t get their applications in very quickly. Many of them just starting to do it this week, but they’ve put a lot of technology behind it. And so we think that they’re now going to be able to submit applications extremely fast and that could suck up funds even faster than they went in this first round.
So please, if you’re looking to get into this program and you haven’t yet made sure all your paperwork send your applications complete, all the supporting documentation is submitted. So that when it is funded, you’re all set and the banks that you’re working with can get turned around pretty quickly. One other loan program just wanted to quickly touch on is there’s a new program called the Main Street New Loan Facility. And essentially that is for mid-sized businesses that the PPP and the EIDL were for businesses with 500 or fewer employees. While this program covers businesses with up to 10,000 employees, this loan though has a minimum borrowing amount of $1 million. So it’s, it really is for businesses that have a little more need and size to them. So not your typical small business. So if that’s of any interest to you, we have blogged about it, you can check out our blog and see if that’s something that might make sense or reach out to anyone on our team. So we’ll continue to keep you apprised as things develop, but that’s where they stand today. Thank you.
by John Geraci, CPA, MST