Additional PPP Loans Are Coming

A new coronavirus relief bill will provide $284 billion in loans for small businesses. Here is how your business can get a second one.

A new $900 billion coronavirus relief and stimulus package was signed into law by President Trump. One of its provisions: An extension of the Paycheck Protection Program, allowing another $284 billion or so in forgivable, federally backed loans for debilitated small businesses.

The original program which was overseen by the Small Business Administration (SBA) and the US Department of Treasury, transmitted about $525 billion to more than 5 million recipients. The original program was filled with liabilities, and loopholes that cultivated countless issues throughout an already pretty complex process.

The Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act clarifies questions about the loan process, but also adds rules about applying for new loans and receiving forgiveness for old ones. The Small Business Administration (SBA) has 10 days to implement the new rules, so more detailed specific rules might be coming. Borrowers and potential borrowers should look to their lenders for guidance. As an example, JP Morgan Chase bank updates their site www.chase.com/cares as they receive information.

Common Questions Business Owners Have

Does This Round Of Loans Differ From The Last Round?

Yes, although some aspects are the same. Applicants have between 8 and 24 weeks to use the funds. The funds should be utilized with at least 60% going towards payroll and the remaining funds towards eligible expenses. Eligible expenses can be found on the Small Business Administration (SBA) website but include things like rent and utilities.

New loans will be capped at $2 Million, compared to the $10 Million before. Applicants must now have no more than 300 employees, compared to the 500 before. Applicants must now also be able to demonstrate a drop in revenues rom the fourth quarter of 2019 to the same period this year, of at least 25%.

The bill also expands on the type of covered expenses to include things related to cloud computing and remote-work software. It also includes government mandated sanitation and social distancing equipment such as partitions, sneeze guards, and air filtration systems. They have also included covered expenses such as “property damage and vandalism or looting due to public disturbances that occurred during 2020.”

One notable aspect of the new bill that’s not directly tied to new loans is an expansion of the employee retention tax credit, a feature of the Coronavirus Aid, Recovery and Economic Stimulus (CARES) Act that encouraged employers not to cut jobs. Businesses that originally received the Paycheck Protection Program (PPP) loans were not eligible to claim that credit, but the new bill now allows the credit.

Can I Get Another Loan If I Already Got One?

Yes.

They call these “second draw” loans and as long as you meet the requirements above, you are able to apply. The deadline for all new loans has been set for March 31st.

Are Certain Businesses Eligible For More Help Than Others?

The bill will restrict certain companies from applying for loans, including businesses specializing in political or lobbying activities. Similar to the Florida Democratic Party which received $780K last time around but later returned the funds. Also excluded in this round are businesses who have China residents on their boards and also businesses who have extensive dealings in China.

The new loan amounts will be determined by a formula that includes payroll costs multiplied by a factor of 2.5 with a cap of $2 Million. Restaurants and other eligible hospitality businesses will be able to multiply those costs by a factor of 3.5 making them eligible for a bit more funding.

Theaters, Museums and Concert venues have been heavily impacted and have all lobbied for additional aid, will not be eligible for new Paycheck Protection Program (PPP) loans. They will be eligible for “Shuttered Venue Operator Grants” which can be worth up to $10 Million.

How Will This Influence My Current Forgiveness Application

If you received more than $150K, it likely won’t. If you received less, the process should be much easier. A few short weeks ago the government simplified the forgiveness applications for businesses that received less than $50K, requiring only a description of how much loan money was spent on payroll, and how many employees the business was able to retain as a result of the funds received.

The new bill now ups that limit to $150K. Businesses will not need to submit documentation supporting their claims, but I would suggest keeping it on hand in the event you are audited down the line.

If you already applied and received loan forgiveness, none of the new provisions apply. At this time, you are done. However, you can apply to receive a second loan if needed.

If you would like more information or assistance applying for a Paycheck Protection Program (PPP) Loan, or assistance applying for loan forgiveness contact us today at (714) 872-2393 or sales@mcdaccginc.com. You can also complete the form below and we will contact you within 24 hours.

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