April 3, 2020 was the first day that small to mid-sized businesses affected by the COVID-19 pandemic could apply for funding from the $349-billion Paycheck Protection Program (PPP) that is part of the CARES Act.
Many media and entertainment companies are still eagerly awaiting to begin the funding process of the PPP loans. However, they have been met with some challenges given the fluidity and numerous updates to guidelines provided by the federal government. The most notable changes include an increase in the interest rate on PPP loans from 0.5 to 1.0 percent and various other changes to the application.
While media and entertainment companies with under 500 employees are eligible to apply for the PPP loan, some may find themselves looking for lenders. Many of the largest banks are imposing restrictions to limit the processing of loans to customers that currently have existing business lending and treasury relationships. However, GHJ has noticed that many of such banks are working to be flexible when there are other personal banking relationships that may already exist.
Given that April 3 was the first day available for acceptances of the PPP loans, the media and entertainment industry (among many others) will need to see how the process goes and make sure that they are in frequent communications with their accounting and banking service advisors to navigate the process. While the $349 billion allocated to PPP may seem like a large number, the full extent of the amounts allocated to banks are expected to be fully depleted prior to the application deadline of June 30, 2020 based on high demand. In fact, Bank of America alone has confirmed that it has received applications from approximately 177,000 small businesses for a total of $32.6 billion in financing, a significant demand that already accounts for nearly 10 percent of the entire amount allocated by Congress.
As a reminder, the CARES Act also includes various other provisions and other opportunities such as the Emergency Government Disaster Loan and Grant Program and a host of other tax opportunities that can be of significant benefit to many small to mid-sized media and entertainment companies and their ownership group.
For more information on the PPP loan process (or regarding the overall impact and opportunities of the CARES Act), please see reach out to GHJ’s COVID-19 team.