NORFOLK, Va. - Small businesses that missed out on the first round of funding from the Paycheck Protection Program can still apply for money.
As of Wednesday, May 13, there was still about $118 billion left in the second round of funding.
“It's actually going much slower than was expected,” said John Asbury, CEO of Atlantic Union Bank.
Asbury says he’s hearing some common misconceptions about the program that may be keeping some businesses from applying.
One of those is that banks are no longer accepting applications or are only accepting existing customers. Asbury says while that may be true at some banks, it’s not true for all of them.
At Atlantic Union Bank he says they’re currently receiving about 60 to 70 applications a day, including some from new customers.
Another question some have is who is eligible.
There was a lot of backlash after people learned of large companies qualifying for PPP loans, which led the Small Business Administration to warn businesses they should not be applying if they don’t need it.
“We feel like that had a chilling effect on some smaller businesses which was never intended. In fact, to that very point, earlier this week the SBA came out with additional guidance that essentially says if you've borrowed less than $2 million, and you've made a good faith certification that you do in fact need the funding, we will not challenge,” Asbury said. “I think the main thing is if you're a business or a nonprofit and you have less than 500 employees, you're probably eligible.”
Another big concern for small businesses is whether they’ll be required to pay back the loan.
It’s intended to end up as a grant if used under certain circumstances, but not everyone is clear on what those are.
The biggest portion of the money, 75%, needs to go to payroll.
“It’s important to understand from the time the loan is funded there's an eight week clock that's going to run and your payroll is forgivable. So whatever you're spending on payroll for eight weeks after the borrowing occurs, that is going to be eligible for forgiveness,” Asbury said.
Up to 25% of the loan can also be forgiven for certain other non-payroll expenses, including rent, mortgage interest and utilities.
The problem some businesses are having is that they may not be able to bring employees back during that eight-week time period.
If businesses are unable to use enough of the money for payroll expenses, they would have to pay the money back at 1 percent interest.
To deal with that, Asbury said businesses can simply borrow less money or understand that they may need to pay some of it back.
Asbury said he’s also lobbying for Congress to approve legislation that would relax some of the requirements.
“I don't know if it will happen or not, but there's a reasonable chance that the SBA is going to back off on some of these restrictions and allow businesses more time to bring back employees,” Asbury said.
Because of that, Asbury said businesses that are interested in applying for the program should do it soon.
“If the SBA were to come out with relaxed requirements, I predict the remainder of the funding would go quite quickly,” Asbury said.