What you need to know about the Payment Protection Program (PPP)
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- Learn the eligibility rules for the new PPP and the additional expenses that can be covered by the loan.
- What it means to be partially approved versus fully approved for forgiveness.
- What disqualifies you for any forgiveness.
- The timelines of both PPP approval, disbursement, and forgiveness.
Payment Protection Program (PPP) Part -2: What you need to know
(updated on January 18, 2021)
The U.S. Government has made $284 billion available for small businesses to support employment and keep their doors open. Here are some key highlights about applying for the loan:
- You can apply for a loan to cover anything between 8 and 24 weeks of costs.
- Eligibility for businesses has been increased to include nonprofits such as housing cooperatives, destination marketing organizations.
- It will offer greater flexibility for seasonal employees.
- Second-time applicants can apply for a second loan or reapply for a first loan or request to modify the amount for their first loan.
- There are specialty guidelines from the government around applications from minority, underserved, veteran, and women-owned businesses.
The Key Players: The Treasury Department and the U.S. Small Business Administration (SBA) are the primary administrators and executors of the PPP.
First Draw PPP: This applies to all businesses applying for the first time. These eligible businesses can apply for the loan from Jan 11 to Mar 31, 2021.
Second Draw PPP: This applies to all businesses applying for the second time. These eligible businesses can apply for the loan from Jan 13 to Mar 31, 2021.
Who can apply?
First-time applicants for PPP loans must have 500 or fewer employees and can be nonprofits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors.
All businesses that have previously received a PPP loan are eligible to apply for a second loan, provided that they can show proof of the following:
- You have received and have already used the full amount or will use the full amount of your first PPP Loan.
- Your business has 300 or fewer employees.
- You can prove that you have at least a 25% reduction in gross revenue between comparable quarters between 2019 and 2020 (for example, Q1 2019 vs. Q1 2020)
First Draw Loan Applicants
Existing PPP borrowers who have not received loan forgiveness by Dec 27, 2020, can reapply for a first draw loan if
- They have returned some or all of the loan funds.
- Can request to modify their loan amount if they did not accept the full amount of loan they were eligible for.
Where can you apply?
You can apply for your loans at community financial institutions. You can find a helpful list to find a lender match at this link.
What is the purpose?
Borrowers can use PPP loans to fund the following:
- Payroll costs, including benefits
- Mortgage interest, rent, utilities
- Worker protection costs related to COVID-19
- Uninsured property damage costs caused by looting or vandalism during 2020
- Certain supplier costs and expenses for operations
How can you apply?
First-time borrowers can start by filling out this application form. Here is the link.
If you are a second-time borrower, start by filling out this form. Here is the link.
|Did you know: Funds for the latest Payroll Protection Program are still available? (updated on May 31, 2020)
According to The Wall Street Journal, as of May 15th, over 40% of Paycheck Protection Program (PPP) funds were still available nearly two weeks after the program was relaunched in late April. The first PPP was exhausted in two weeks so it is a surprise that applications for this second relief program ($310 billion) has slowed down. If you meet the requirements, apply today to ensure payroll to your employees.
Application and eligibility criteria here.
If you have received PPP funds…
Here is the next step to ensure your loan converts to a grant. This is the application form, released on Friday, May 15th, that can have your loan forgiven.
An overview of eligibility/conditions to turn your PPP into a grant:
- Document payroll costs incurred during the Covered Period or the Alternative Payroll Covered Period.
- Payroll costs that are incurred, but not paid, during the borrower’s last pay period of the Covered Period or the Alternative Payroll Covered Period are eligible for loan forgiveness if paid on or before the next regular payroll date
- For each individual employee, the total amount of cash compensation eligible for loan forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period (or $15,385, the 8-week equivalent of $100,000)
- Business mortgage interest payments
- Payment of interest (but not including any payment or prepayment of principal) on any business mortgage obligation on real or personal property so long as the mortgage was in place on Feb. 15, 2020
- Business rent or lease payments so long as the lease agreement was in place on Feb. 15, 2020
Business utility payments for services for electricity, gas, water, transportation, telephone or internet access so long as the service was in place on Feb. 15, 2020.
The clearest explanation of this new requirement/application, believe it or not, comes from the National Law Review. Written for laypersons, like you and WVF, this article provides a clear and non-legal description of the requirements to turn your loan into a grant:
New grant opportunity: Ginger Bread Grants to be awarded to businesses with over $250K in 2019 with paid staff of five or more.
GingerBread Capital invests in the next generation of women founders and entrepreneurs leading high-growth businesses. In response to the Covid-19 pandemic they are offering grants to women-owned businesses, achieving ovr $250K in revenue and staffing five or more employees. Must be in business at least two years.
Maintain your inner grit and determination!
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