The 362 businesses and nonprofits in the Marianas that have been approved for Paycheck Protection Program loans will have more flexibility in use of the money under the legislation Congress has passed and sent to the President to sign into law.
In a news release CNMI Congressman Gregorio ‘Kilili’ Sablan said the Paycheck Protection Program Flexibility Act makes the money more helpful by stretching out the time when it can be used, expanding what it can be spent for, and giving more time for repayment, if the loan is not converted to a grant. PPP loans can be completely forgiven, if borrowers meet certain program requirements.
Originally the PPP loan period was for eight weeks. But Sablan said it is now clear the economy in the Marianas and nationwide will not quickly snap back. So, the Flexibility Act expands the time in which the money must be used to 24 weeks.
The House bill, H.R. 7010, passed the Senate on a voice vote Wednesday night, In the House the vote was almost unanimous, 417 to 1.
CNMI businesses and nonprofits have qualified for the $35,679,198 in PPP funding that will help them pay their employees, rent, utilities, and other costs.
“The money will circulate through the Marianas economy, which is good for everyone, and keep those businesses alive through the coronavirus crisis,” said Congressman Sablan.
The Act also removes a requirement, imposed by the Trump administration, that no more than 25 percent of a PPP loan can be used for fixed costs. Now, businesses will be able to spend 40 percent of the money for rent, utilities, and other on-going expenses. The other 60 percent must go to payroll.
Many of the PPP loans are expected to be converted to outright grants from the federal government, if requirements like the new 60-40 rule are met. In the event that the loan does have to be repaid, the Flexibility Act extends the payback time from one year to five years, another acknowledgement of the economic hardship the coronavirus is causing.
The Paycheck Protection Program has proven popular with struggling businesses nationwide. It was established in the Coronavirus Aid, Relief, and Economic Security, CARES, Act in March with $350 billion in funding. That money was quickly used up, however; and Congress responded with an additional $310 billion in April. Currently there remains over $100 billion that businesses and nonprofit organizations may still apply for.
Information about how to apply for the Paycheck Protection Program is available at https://www.sba.gov/document/sba-form-2483-paycheck-protection-program-borrower-application-form.