John Mallano, the deputy director of the New York office of the U.S. Small Business Administration, answered questions about the Payroll Protection Program and the latest information for small businesses.

Below find more information from the Small Business Administration about what the Payroll Protection Program is and how it works:

The main role of the Payroll Protection Program is just that – keeping workers on payroll and employed.

As many members of Congress have stated, many aspects of the CARES Act was intended for small businesses – defined generally as any firm with 500 or fewer employees. Supposedly, Congress will be addressing this in the short term, but as of now, we can only go by what they passed and signed into law. Congress makes the laws and federal agencies, like SBA, administer what they pass and is signed into law.

Regarding the pacing mechanism and other information pertaining to some of the questions for background/your situational awareness:

SBA notified lenders two days ago that pacing of applications into the ETran system would occur, meaning all lenders would be able to submit at the same rate per hour. This was to ensure that all lenders, no matter the size, have equal access to the system and ETran is not overwhelmed. If a lender goes above the pacing limit they will get timed out. The pacing mechanism prevents any one lender from submitting thousands of loans an hour into the ETran system.

This is on top of every bank being allowed one grouping of 5,000+ PPP applications into the system. The SBA is actively working to ensure system security and integrity while loan processing continues.

Regarding large corporations, I would direct you to the congressional approved law which had a specific carve out for the Hospitality & Food Service industry (NAISC Code 72). The PPP limits loan recipients to businesses with fewer than 500 employees and revenue of less than $2.5 billion. But Congress made an exception for restaurants and other food service businesses that employ fewer than 500 people per location, meaning that restaurant chains are as eligible for the loans as a neighborhood restaurant or bar. The Long Island Business News recently carried an Associated Press story outlining this. Also included in this is any franchise location of a business/corporation. Right there in the CARES Act, in black and white type face. Section 1102 of the CARES Act:

“(iv) WAIVER OF AFFILIATION RULES.—During the covered period, the provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor regulation, are waived with respect to eligibility for a covered loan for—

“(I) any business concern with not more than 500 employees that, as of the date on which the covered loan is disbursed, is assigned a North American Industry Classification System code beginning with 72;

“(II) any business concern operating as a franchise that is assigned a franchise identifier code by the Administration; and

“(III) any business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681).”

Regarding - “how long the money will last” – please remember first, this is not money the SBA is providing. The agency is guaranteeing private lending dollars from bank and lenders. It’s a subtle difference, but a large one in that the government is not doling out dollars through direct lending. That said, it’s tough to estimate and we cannot really do so. The facts are: during the initial Congressional funding in the CARES Act, which was at $349 billion, the congressional appropriation was expended in two weeks. The SBA guaranteed more loans in those 14 days than the agency had done in the past 14 years.

Number-wise, Congress re-appropriated $310 billion to CARES, about 39 billion less during this round which has more banks participating and ready to go with applications.