The Treasury Department and SBA made an announcement on May 28 to set aside $10 billion of round two Paycheck Protection Program (PPP) funding exclusively for Community Development Financial Institutions (CDFIs) to lend. This $10 billion set aside included $3.2 billion in loans that CDFIs had already made in round two. In a recent statement, OFN President and CEO Lisa Mensah applauded the set aside while also encouraging the SBA and Treasury to set aside an additional amount of PPP funding for MDIs (Minority Depository Institutions) reaching underserved businesses.
Also, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) into law on June 5. The PPPFA passed nearly unanimously through the House and Senate and makes several changes to the PPP. The PPPFA modifies the portion of the overall loan that must be used to cover payroll—from seventy-five percent to sixty percent—to provide greater flexibility for businesses that have significant overheard costs.
The new law also extends the time period for businesses to use funds from eight weeks to twenty-four weeks and gives businesses until the end of the year to rehire employees. Additional flexibility on the rehiring process and the repayment period is also included. Importantly for CDFI PPP lenders, the PPPFA did NOT change the June 30 deadline for lenders to submit new applications for PPP loans to the Small Business Administration (SBA).