More PPP money is coming — there's good news and bad news
- $310 billion was added to the Paycheck Protection Program, which provides forgivable loans for businesses with less than 500 employees, including freelancers.
- $60 billion is set aside for small lenders and community development banks with the intention of funding traditionally underserved communities, including those of color.
- The program was weighted in favor of big business, and freelancers had extreme difficulties accessing funds the first time around.
- It’s not yet known when funds will become available, but they will likely run out quickly. Get your paperwork started now to file with one of these SBA-approved lenders - some are accepting applications now.
On Friday, the president signed another major piece of stimulus legislation in response to the ongoing coronavirus crisis. Critically, this new package includes an additional $310 billion for the Paycheck Protection Program, which ran out of money just four days after it began accepting freelancers’ applications.
Freelancers Union determined the first phase of the PPP was biased against sole proprietors and independent workers, who were required to wait a week to file after the fund opened to multi-employee businesses. In that time, a number of large, publicly traded companies exploited loopholes to take on PPP loans, withdrawing hundreds of millions of dollars that should have gone to struggling freelancers.
Large banks also restricted freelancers’ access to the loans, which are meant to cover 8 weeks of payroll and some operating expenses and are forgivable if used for those purposes. CNN reported that Bank of America, Wells Fargo, JPMorgan Chase and US Bank had been sued for allegedly failing to process PPP loans on a first-come, first-served basis. The banks "concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money," each of the four lawsuits said.
Earlier this week, we sent a letter to House Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin to demand PPP be re-funded in a way that would put freelancers first. And while this new bill is a step in the right direction, we’re still concerned that the program is weighted to favor big business, providing few protections for the millions of struggling freelancers who make up the majority of small businesses in this country.
Among our demands was that 50% of PPP loans be guaranteed for minority sole proprietors, and that big banks be barred from requiring a preexisting relationship to process applications. What we got was $60 billion set aside for small lenders and community development banks, which focus on underserved communities, often those of color. That’s just 19% of the new funds, and doesn’t contain an explicit guarantee to serve minority business owners.
It’s not yet known when the new PPP funds will become available. When they do, we encourage freelancers to be prepared to apply immediately (see a full list of current SBA-approved lenders here), as the money will almost certainly run out again. And as the loans are given out, it’s critical that the SBA collect and publish data on the demographics of those who receive the money, including specific information on the number of loans given to self-employed people and independent contractors.