This past Friday the President signed the Paycheck Protection Program (PPP) Flexibility Act into law. The law modifies the guidelines of the original PPP making the repayment terms and forgiveness components of PPP loans more “flexible” as the name of the bill states. The more relaxed PPP parameters will likely cause the remaining $100 billion of PPP funding to go quickly. Outlined below is an overview of the key improvements of the new PPP Flexibility Act:
Key PPP Improvements
Certain positive provisions of the original PPP have remained, such as the 1% interest rate, no personal guarantee or collateral requirement, and no application or loan fees charged to the borrower. The full text of the bill is here, but a few of the key changes are as follows:
- The “covered period” for forgiveness related to the loan funds has been increased from eight (8) weeks to twenty-four (24) weeks.
- Forgivable expenses that are not “payroll costs,” including rent, utilities, mortgage payments, and other interest, are now permitted to amount to up to forty percent (40%) of the forgivable amount, an increase from twenty-five percent (25%) under the original PPP.
- The deferral on payments has been extended from six (6) months to twelve (12) months.
- All new PPP loans originated after the enactment shall have a five (5) year maturity, an increase from two (2) years under the original PPP. Lenders shall have the ability to modify the existing loan terms to increase the maturity to five (5) years.
Where to Get a PPP Loan
Your local bank is a great place to apply for your PPP loan, as small and regional banks have been very successful processing and obtaining PPP loans for their clients. If you don’t have access to a local bank, or would prefer an easy, automated application process, then the below PPP loan providers are an excellent option. As of the date of this article, LendVer is not aware of any lending restrictions issued by the firms outlined below. Please defer to the providers’ main websites regularly for updated guidance and potential program changes.
Fundera is one of the largest online business loan marketplaces in America and has provided in excess of $2 billion to over 50,000 small businesses. The firm was also one of the first technology-based loan providers to implement an effective PPP loan application and processing system. Through its proprietary technology, Fundera has streamlined the PPP loan process enabling even the smallest of businesses to apply for, and obtain a PPP loan from its extensive network of approved lenders.
Lendio has been highly successful in processing and facilitating PPP loans through a user-friendly, technology-based platform. Via its unique software, and deep lending relationships, it has provided over $5.8 billion of PPP loans to over 70,000 small businesses. It also has a relatively low average loan size of $82,000, compared to other banks and lenders more focused on processing applications for larger businesses.
The relaxed PPP guidelines and forgiveness parameters just signed into law, have improved the utility and design of the program for existing PPP loan holders and those considering applying for a PPP loan. Although the demand for PPP loans fizzled out after a robust start, these new program adjustments will likely speed up the depletion of the remaining program funds. Becoming law on the heels of positive employment data, the PPP Flexibility Act will add further fuel to the fire to help small businesses rebound from unprecedented economic conditions.
Don’t hesitate to contact us if you are unsure of which financing option is the right choice for you, or if you need additional lender recommendations beyond those mentioned in this article.