Entrepreneurs take lion’s share of first round of Paycheck Protection Loans

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Associated General Contractors of America

UPDATE April 24, 2020: President Trump today signed the $484 billion Coronavirus Relief Package to replenish the popular Small Business Paycheck Protection Program, support hospitals and COVID-testing. 19. The first round of PPP funding was completed in two weeks. If you need help keeping your best employees, meet with your lenders and submit your applications as soon as possible.

Construction is the business sector that received the most money from the first round of $349 billion from the Small Business Paycheck Protection Program administered in just a few weeks by the US Small Business Administration. The program was designed to keep people employed by companies with 500 or fewer workers off the unemployment rolls – part of a $2.3 trillion coronavirus relief package that President Donald Trump signed into law March 27.

Treasury Department Paycheck Protection Program Fact Sheet for Borrowers

If you meet certain program requirements, up to 100% of the loan proceeds may be forgiven, and there will be no tax implications. Notably, the SBA will fully cancel all loans under the Paycheck Protection Program, provided all borrower requirements and documentation are met.

On April 23, a week after the full $349 billion in initial PPP funding was committed, the U.S. House of Representatives sent another ‘interim’ coronavirus relief bill worth $480 billion to President Trump for his expected signature. The new bill injects $310 billion into P3s. The bill also allocates $60 billion to Economic Disaster Loan Programwhich covers non-repayable grants for small businesses.

On 178,000 construction companies have been approved for loans of the original $349 billion PPP program. Construction loans total $44.9 billion; more than 13% of this first tranche of financing.

A large portion of Associated General Contractors member companies quickly received loan funds under the new Paycheck Protection Program, allowing many to hire or retain employees despite rising costs. project cancellations, depending on an AGC coronavirus survey published on April 24.

“Most entrepreneurs report applying for the new federal loans, which are intended to allow small businesses to keep employees on their payrolls,” said Ken Simonson, the association’s chief economist. “This program has already disbursed funds to nearly half of survey respondents, and many of them have already brought furloughed workers back or added employees, even as more customers pause and cancel jobs. projects.”

InsuranceJournal.com highlights the construction sector accounts for less than 9% of overall employment among U.S. companies with 500 or fewer employees, according to 2017 U.S. Census Bureau data, the latest available.

The dispersal of early PPP funds posed more problems than a suggestion that construction received a disproportionate share.

A recent National Small Business Association survey of nearly 1,000 small business owners shows that larger companies have been luckier than their smaller counterparts. While 52% of surveyed businesses with 20 or more employees said they had received approvals, only 18% of the smallest U.S. businesses — those with 10 or fewer employees — were approved for PPP loans. The survey was conducted by the National Small Business Association, a small business advocacy group in Washington, DC, between April 15 and 18.

The PPP application for the self-employed and independent contractors didn’t even become available until April 10, less than a week before the program ran out of money. Banks tended to give loans to their existing customers, and many added restrictions such as requiring borrowers to hold both a checking account and a credit account with them to be eligible. .

Worse still, restaurant and hotel chains entered the program through a loophole in the original legislation designed to support restaurant and hospitality businesses. The Washington Post reports the Shake Shack chain says it will return its $10 million in PPP funding, but it’s unclear if others will too. Ruth’s Chris Steak House, a chain of 150 locations, received $20 million in PPP funds. The Potbelly sandwich chain, which has more than 400 locations, said it received $10 million.

Inc. reports that the latest stimulus will allocate about $60 billion to small financial institutions. This is good news for small businesses, as small banks tend to serve small businesses.

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