Congress passed legislation on June 3 to ease the rules and extend the deadlines for the Paycheck Protection Program, which gives forgivable loans to small businesses to keep people on payrolls.
It was sent to President Donald Trump for his signature, which was expected.
The deadline to apply for a loan is still June 30, but businesses will now have until Dec. 31 to spend the funds.
Businesses had complained they couldn’t spend their loan money in such a short time frame when their workers didn’t have much to do, because they were still closed.
Without the revisions, the first businesses to receive Paycheck Protection loans would have to start paying them back June 8.
Another rule change requires a business to spend 60 percent of its loan on payroll, down from 75 percent when the Paycheck Protection Program (PPP) went into effect.
The legislation also defers payroll taxes for businesses getting the loans, and it gives them more time to repay any part of a loan that isn’t forgiven.
The PPP launched in early April as part of the CARES Act with $349 billion in funding that was spent in two weeks. Congress provided an additional $310 billion on April 21.
According to the Small Business Administration, on May 30, $120 billion of the $310 billion was available with 4.4 million loans processed.
Gov. John Bel Edwards has encouraged small-business owners to apply for assistance and for Louisiana banks to pursue access to those federal dollars.
The federal loan program, administered through the Small Business Administration (SBA), is being made available through Louisiana financial institutions.
Edwards also announced additional help through a new Louisiana Loan Portfolio Guaranty Program (LPGP).
It will offer loans of up to $100,000 to Louisiana small businesses of fewer than 100 employees affected by the COVID-19 crisis.
To help Main Street and rural businesses sustain operations, the loans will require no payments and will bear no interest for 180 days and carry below-market interest rates of no more than 3.5 percent.
LPGP loans will provide up to $100,000 to help small firms meet payroll, retain employees, pay rent and mortgages and keep their doors open.
Businesses may find loan details at www.OpportunityLouisiana.com/covid19.
A list of participating bankers is available at the website.
Other highlights of the PPP revisions:Current PPP borrowers can extend the eight-week period to 24 weeks or keep the original eight-week period. New borrowers will have a 24-week period. New borrowers have five years to repay the loan instead of two. Existing PPP loans can be extended up to 5 years if the lender and borrower agree. The interest rate remains at 1 percent. The bill allows businesses that took a PPP loan to also delay payment of payroll taxes, which was prohibited under the CARES Act.