New PPP Funding Available: What You Need to Know

At the end of 2020, Congress passed a new COVID-19 relief package with more money for the Paycheck Protection Program (PPP), which helps businesses affected by the coronavirus pandemic. The new legislation makes $284 billion in additional funds available through the program.

The application portal is currently open and will remain open until March 31, 2021 or until all the allocated funds are exhausted.

Business owners likely have a lot of questions about whether they qualify for this new round of  PPP loans and how much they might be able to receive. The Small Business Administration recently released guidance on how to interpret the law and instructions for borrowers, and we have summarized the most pertinent guidance below.

Key provisions of the package for small business owners:

• An additional $284 billion in funds for forgivable PPP loans to businesses to cover specific expenses, including employee salaries.
• Both new borrowers and those who have received PPP funding before, in specific circumstances, are eligible for the new funds if they meet the conditions.
• $12 billion set aside for businesses in low-income or minority communities.
• $35 billion set aside for new PPP borrowers.
• $30 billion set aside for borrowers with a maximum of 10 employees or for loans of less than $250,000 to borrowers in low- or moderate-income neighborhoods.
• Borrowers must continue to certify that “the current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Who qualifies for the new PPP funding?

First-Time Borrowers:

• Who have 500 or fewer employees and are eligible for other SBA 7(a) loans.
• Sole proprietors, independent contractors, and eligible self-employed individuals, not-for-profit organizations.
• Accommodations and food services operations with fewer than 300 employees per physical location.

Previous PPP Borrowers:

• Who have 300 or fewer employees.
• Who have used all or will use all of their first PPP loan.
• Who can show a 25% decline in gross revenue decline in any 2020 quarter compared to the same quarter in 2019. (For loans over $150,000, borrowers must submit documentation to demonstrate this revenue reduction; for loans under $150,000, documentation is not required until the borrower applies for forgiveness.)

How much can I borrow?

Generally, both first-time and second-time PPP borrowers are eligible for 2.5 times their average monthly payroll costs in 2019, 2020, or the year prior to the loan.

For businesses applying for a second PPP loan, businesses with NAICS codes starting with 72 (including hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs.

How do I get a new PPP loan?
The PPP loan portal is open now, and you can work with your lender to check whether you may qualify and get the process started. Reach out to us at info@sbfcpa.com for more information.