What's Hot in Small Business – Chris Crum
Chris Crum writes for Small Business Resources about what's new for small business. Chris was a featured writer with the iEntry Network of B2B Publications where hundreds of publications linked to his articles including the Wall Street Journal, USA Today, LA Times and the New York Times.

SBA and Treasury Department Set Aside $10 Billion for Community Development Financial Institutions (CDFIs) to Participate in PPP

SBA and Treasury Department Set Aside $10 Billion for Community Development Financial Institutions (CDFIs) to Participate in PPP

Paycheck Protection Program (PPP) loans began in April as part of the federal government's response to the economic fallout of the coronavirus. These forgivable loans were designed to keep America's small businesses operating during the crisis by helping them make payroll without having to lay off employees.

There is now greater attention being given to affected businesses in low-income communities. The United States Small Business Administration (SBA) and the Department of the Treasury recently announced that $10 billion of Round 2 funding has been set aside for the PPP specifically to be lent by Community Development Financial Institutions (CDFIs), which aim to expand economic opportunity to such communities by way of access to financial products and services for local residents and businesses.

According to the SBA, the funds will ensure that any community impacted by the coronavirus crisis is able to gain access to PPP loans. The funds are expected to help ensure that minority-owned businesses have a fair shot at obtaining PPP loans.

“The forgivable loan program, PPP, is dedicated to providing emergency capital to sustain our nation’s small businesses, the drivers of our economy, and retain their employees,” commented SBA Administrator Jovita Carranza in a press release. “CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time.”

SBA Administrator Jovita Carranza (Image via SBA.gov)

Treasury Secretary Steven Mnuchin added, "The PPP has helped over 50 million American workers stay connected to their jobs and over 4 million small businesses get much-needed relief. We have received bipartisan support for dedicating these funds for CDFIs to ensure that traditionally underserved communities have every opportunity to emerge from the pandemic stronger than before.”

Treasury Secretary Steven Mnuchin (Image via Treasury.gov)

On June 5, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law. The PPPFA amends the PPP and offers more flexibility to borrowers on how and when they are able to spend their loans, while still being able to have them forgiven.

“This bill will provide businesses with more time and flexibility to keep their employees on the payroll and ensure their continued operations as we safely reopen our country," Carranza and Mnuchin said in a joint statement, upon the Act's passing. "We look forward to getting the American people back to work as quickly as possible.”

Under the new rules, the coverage period for loan forgiveness has been extended from eight weeks to twenty-four weeks after the loan disbursement. Additionally, the requirement that 75 percent of a loan be used for payroll is lowered to 60 percent. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will still be eligible for partial loan forgiveness.


Read other business articles