Feb 24, 2021
By Eva Reinoso Tejada :::
PPP loans have been a lifesaving resource for many businesses since the pandemic began. These loans were established by the CARES Act, and later expanded and adjusted under the Consolidated Appropriations Act, 2021. These loans are administered by the U.S. Small Business Administration (SBA), in cooperation with many financial institutions across the country.
The initial goal of these loans was to help businesses keep their employees on the payroll and hopefully prevent massive job losses due to the pandemic closures. It did not work out as expected as ‘larger’ small businesses got to the funds first and many of those small businesses who really needed the help could not get to the funds on time. As the program has been expanded, re-funded, and fixed a couple of times, now the SBA has announced a new “priority window” for organizations with fewer than 20 employees. In Colorado, over 36,000 PPP loans totaling about $2.9 billion have been approved for small businesses since January 2021. These are the most important features of this new rule, as announced by the SBA:
1. There will be a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees starting Wednesday, February 24th, 2021, and closing on March 9th, 2021.
2. It includes sole proprietors, independent contractors, and self-employed individuals, after the PPP’s funding formula has been revised.
3. It eliminates a restriction for small business owners with prior non-fraud felony convictions.
4. It eliminates restrictions on small business owners who have struggled to make federal student loan payments.
5. It ensures access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.
Businesses who have already received a ‘first’ PPP loan might be eligible for a ‘second’ loan, or PPP2, if they meet the conditions established in the program: They must have 300 or less employees, they must have used the full amount of their first PPP loan, and should be able to show a 25% of gross revenue decline in one of the 2020 quarters, compared to 2019.
Borrowers can apply for the Paycheck Protection Program by downloading the First Draw PPP application loan, if they have not received a PPP loan before, or the Second Draw PPP loan application, if they have been a beneficiary of the program in the past. The SBA also provides a list of participating PPP lenders through the SBA Lender Match tool. By answering a few questions on this interactive tool, your business can be matched to a lender that best fits your needs. The SBA published a comprehensive press release that includes valuable information.
Currently, the Federal Government is in the process of approving more stimulus money that will benefit small businesses, particularly restaurants. The RESTAURANTS Act of 2021 was introduced to establish a $120 billion fund to support independent restaurants and small franchisees as they deal with the long-term challenges due to COVID-19. The fund will be available to restaurants, food trucks, food stands, food carts, caterers, taverns, bars, saloons, inns, lounges, brew pubs, taprooms, tasting rooms, licensed facilities, or other similar industry business with 20 or fewer locations. Eligible expenses will go beyond payroll, to include many other costs (like remodeling to fit Covid-19 seating restrictions). This Act is not law yet, but it will probably happen soon in some form.
You can visit the SBA page and learn about these opportunities, but a good place to start is usually your own bank or your accountant. Most banks are now set up to process these loans, even though these are administered by the SBA. However, if a business needs help gathering their financial information, they will probably pay a fee for that service, most likely to an accountant or bookkeeper. But applying for the PPP loans is always free, as the SBA does not charge a fee to the borrower.