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Until the U.S. Small Business Administration changes its position and rules, bankruptcy debtors are still unable to obtain PPP loans.
That’s because, under the Consolidated Appropriations Act 2021 (the Act) signed by President Trump on December 27, 2020, none of the provisions relating to bankruptcy are effective until and unless the SBA allows them.
The Act goes into great detail about how bankruptcy debtors, or trustees acting on their behalf, can obtain Paycheck Protection Program (PPP) loans.
But at the end of Section 320 of the Act, Congress states that the bankruptcy provisions allowing debtors in bankruptcy to obtain PPP loans takes effect only when the SBA submits a written determination to the Director of the Executive Office for the United States Trustees that any bankruptcy debtor or trustee that is authorized to operate the business of the debtor “would be eligible for a loan under paragraphs (36) and (3
Scott Simpson from the banking and credit union industry.
Sterling Nielsen, president and CEO of Mountain America Credit Union, and
Natalie Kaddas, president and CEO of Kaddas Enterprises, served as moderators.
“We convened the Roadmap to Recovery Coalition to educate, inform, and advocate for policies that will help Utah businesses working through the pandemic,” said Derek Miller, president and CEO of the Salt Lake Chamber. “The relief provided in this legislation is needed greatly, and the Chamber has called for many of the provisions contained in the new bill to save Utah businesses and jobs for the people they employ.”
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The CARES Act created the Paycheck Protection Program (“PPP”), which amended the Small Business Act (“SBA”) to provided short term loans to companies with fewer than 500 employees and other companies (such as those in the Accommodation and Food Services Industry). Such loans may be eligible for full forgiveness if used for payroll and other business expenses and all other statutory requirements are met. Now, Congress has passed a second Stimulus Bill called the Coronavirus Response and Relief Supplemental Appropriations Act which is on President Trump’s desk for signature. The bill, among other things, creates a second loan from the PPP called a PPP Second Draw Loan for smaller and harder-hit businesses. Below is an overview of the terms of the PPP Second Draw Loan.
Coronavirus Relief Summary
On Monday, December 21, Congress passed the Consolidated Appropriations Act, 2021, which includes the highly anticipated coronavirus relief package. The $900 billion relief package includes funding for stimulus checks, unemployment benefits, small businesses, vaccine distribution, health care, education, transportation, rental assistance, and agriculture. President Trump is expected to sign the legislation.
Compared to the CARES Act, the stimulus checks in this new relief package are smaller. Taxpayers making less than $75,000 can expect to see a $600 stimulus check, compared to $1,200 per person included in the CARES Act. Similarly, the relief package will provide an extension of the CARES Act unemployment insurance of $300 through March 14, 2021. Under the CARES Act, workers receiving unemployment received $600 per week.
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On December 21, 2020, Congress agreed to a $900 billion stimulus bill, passed as The Consolidated Appropriations Act, 2021 (“the Act”). The 5,593-page Act includes funds designated for direct relief, additional money for forgivable Paycheck Protection Loans and tax relief measures, but does not include funding specifically for restaurants or hotels.
Paycheck Protection Program Second Draw Loans: The Act sets aside $300 billion in additional Paycheck Protection Loans. Of that, $15 billion is earmarked for live entertainment venues and $20 billion is set aside for businesses in low-income communities. Businesses with fewer than 300 employees are eligible for a maximum of $2 million in loans.