Last night Congress finally passed a new round of stimulus funding. The $900 billion Covid-19 relief package included $285 billion for a renewed Paycheck Protection Program. You can read the full text of the 5,593-bill here.
This is big news for fintech as our industry played a major role in the initial rollout of the PPP earlier this year. While the details are similar to first PPP there are some important differences. Here are just some of the details:
- Companies that received a first PPP loan can apply again provided they have 300 or fewer employees AND experienced a 25% drop in revenue in any quarter compared to 2019.
- First time borrowers will be subject to the rules of the initial PPP although public companies will not be eligible.
- Maximum loan size is $2 million, down from $10 million.
- Small businesses can apply for 2.5 times their monthly payroll (3.5 times for the hospitality industry).
- Borrowers need to spend at least 60% of the proceeds on payroll for full forgiveness.
- The SBA will be required to establish regulations no later than 10 days after the legislation is signed into law.
- Both the House and the Senate have passed the legislation with large majorities and the President has until December 28 to sign into law.
So, early in the new year round two will begin. While we don’t know the details of the program yet we learned from the New York Times yesterday that the top four PPP lenders, Bank of America, JPMorgan Chase, Cross River Bank and Wells Fargo all intend to participate again.