Yesterday, legislation adding an additional $310 Billion to the Payroll Protection Program (PPP) and $50 Billion to the Economic Injury Disaster Loan (EIDL) funds passed the Senate, and passage in the House is imminent. But the new funds will disappear quickly!
The original massive PPP and EIDL appropriations evaporated in less than two weeks. Although those funds were designed to keep small businesses alive in the face of the COVID-19 pandemic, publicly traded companies and those with strong lender relationships were reportedly pushed to the front of the line. The International Franchise Association (IFA) reports that although 98% of franchisees applied for the loans, only 12% received PPP funding – despite approval of over 61% of franchisee applications.
Addressing the funding disparity, the new authorization specifically sets aside funds for smaller businesses and minority businesses. Equally important it earmarks $60 Billion for community development financial institutions, which appears to be designed to overcome the gating processes employed by established institutions to prioritize loan applicants during the first round of funding.
But this opportunity for franchisee and small businesses to reach PPP funds won’t last for long. It’s likely that the previously-approved borrowers will get the PPP funds first, so new applicants must ACT FAST! The newly-appropriated funds may disappear in 48 hours. And Senate leader McConnell has indicated that he does not intend to ask the Senate to consider additional rescue funds until sometime in May at the earliest.