The Paycheck Protection Program (PPP) is an SBA loan program that helps small businesses continue to pay employees. It also offers forgivable loans to cover eligible costs. These benefits are typically handled through online portals. Source : https://www.scura.com/blog/paycheck-protection-program-ppp-round-2-2021
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Initially, the Paycheck Protection Program was designed to provide up to eight weeks of cash flow assistance to businesses that were in the midst of a COVID-19 pandemic. However, it eventually ran out of funding.
In the interim, the program was expanded through the Paycheck Protection Program and Health Care Enhancement Act. This act increased the maximum amount of loans and increased the maximum time that borrowers could use PPP funds. Lastly, it also reduced the percentage of loan funds that can be used on payroll.
The Paycheck Protection Program is a great tool to help small businesses remain solvent during a crisis. However, it isn’t the only solution for businesses in need. Thankfully, the federal government has stepped in to offer more assistance for business owners in need.
In the Paycheck Protection Program, the small business borrower is encouraged to use the money on qualifying non-payroll costs. If the borrower can prove that their average monthly payroll is higher than 24 weeks, the loan is forgivable.
On top of the forgivable loan, the Paycheck Protection Program also provides a Liquidity Facility that extends credit to financial institutions. Additionally, the program has a reserve of funds for community financial institutions.
Despite the many challenges, the Paycheck Protection Program was a success. During the Trump administration, the program disbursed more than $525 billion in loans to small businesses.