How To Qualify For A “PPP 2.0” Loan For Your Small Business
The Senate has approved a two-month extension on the second round of Paycheck Protection Program (P3) tax-deductible loans aimed at business owners struggling to cover overhead costs. A new May 31 deadline was deemed necessary as there was a growing backlog of homeowners who needed more time to file their applications. Here’s what you need to know and how to apply.
What is PPP?
As part of the CARES law passed last March, the first iteration of the PPP provided a total of $ 519 billion in forgivable loans to help businesses cover salary and overhead costs during the pandemic. In the latest back-up plan, a second round of first-come, first-served PPP loans totaling $ 284 billion was made available.
The US Small Business Administration (SBA), which manages the program, has been criticized for unfairly distributing the first round of funding, with banks prioritizing existing customers, which has benefited, among other things, companies run by members of Congress and large listed companies who already have access to capital markets.
As a result, “PPP 2.0” set aside funds for small businesses and increased the range of expenses for which PPP loans can be used, including expenses for enterprise software, vendor payments and more. costs related to COVID such as ventilation or PPE. However, by Forbes, the approval process for these loans was slowed down by technical issues and additional advice needed for independent contractors, which is why the deadline had to be extended. The bill is now handed over to President Biden for his signature, which is expected this week.
Who is eligible for the PPP?
First-time PPP borrowers are eligible if they own a business with up to 500 employees, were in business as of February 15, 2020, and can provide payroll documents to demonstrate lost income.
The eligibility conditions for second-draw PPP loans are more stringent than for first-draw PPP loans. The cap remains at $ 2 million, but is limited to borrowers with 300 or fewer employees. Borrowers must also demonstrate a quarterly gross revenue loss of 25% or more from the same quarter in 2019.
First and second draw loans can be canceled if at least 60% of the total loan amount is used for salary expenses (although second draw borrowers with principal of $ 150,000 or less are required provide documented proof of loss of income).
How to register
Eligible businesses can apply for a PPP loan directly from an eligible private lender such as a bank, community lender, or credit union. The program will remain open for applications until May 31, 2021. For more information and to receive an invitation to apply for a PPP loan, Click here.
This story originally appeared in Fed. 22, 2020 and updated March 29, 2021 with new information.