It also includes businesses that represent performers. Swimming In A Sea Of Onboarding Paperwork? Are eligibility requirements different for PPP-2? Borrowers still have to use 60% of the funds on payroll and 40% on expenses over a 24-week period. Instead, you’ll apply for a PPP loan through an SBA-approved lender. One of the biggest issues with the first round of PPP was the unintended tax consequences. In addition, the new law earmarked $15 billion in straight grants that do not need to be repaid for live entertainment venues, which were some of the hardest hit businesses due to Covid shutdowns. Eligible businesses must have fewer than 300 employees and have seen a 25% reduction in revenues since their first PPP loan. Please stay tuned for more information regarding the latest Paycheck Protection Program round. While it was clear that a forgiven PPP loan would not be considered income, Treasury guidance did not permit normally deductible expenses paid for by PPP funds to be deductible. Insights To Help You Understand And Leverage Opportunities In The $79 Billion Sleep Industry, The Unexpected Ways Covid-19 Has Forever Changed What We Eat, The Complete 35-Step Guide for Entrepreneurs Starting a Business, 25 Frequently Asked Questions on Starting a Business, 50 Questions Angel Investors Will Ask Entrepreneurs, 17 Key Lessons for Entrepreneurs Starting A Business, Guidance on Accessing Capital for Minority, Underserved, Veteran, and Women-Owned Business Concerns. Neil Hare is an attorney and President of Global Vision Communications, where he specializes in small business policy, advocacy, and communications campaigns; follow him on Twitter @nehare and on LinkedIn. Your Life Raft Has Arrived, LinkedIn Is Building A Gig Marketplace, And Other Small Business Tech News, If You Want To Sabotage The Customer Service Experience, Just Ask, ‘But Will It Scale?’, The World’s Best Customer Service (And The Worst) Were On Display In Texas, A Call To Duty: Small Business Can Lead On Covid-19 Vaccinations And Help Bring The Economy Back, Why You Don’t Need An Accounting App When Responsive Web Design Exists, How Do You Make Money While You Sleep? It is important to note that the main activity of a business must be live entertainment, so a restaurant that provides a nightly singer, for example, would not be eligible. "We … PPP loan under Round 3 in an amount equal to the difference between the amount obtained, if any, and the maximum amount permissible. Apply for a Paycheck Protection Program (PPP) Second Draw loan Customers who took a PPP loan through Kabbage can now apply for a Second Draw PPP loan from K Servicing. Notice: In order to reach smaller businesses, the SBA will provide an exclusive access period to PPP loans for businesses with fewer than 20 employees, self-employed … In a positive development, borrowers of loans of $150,000 or less can “check the box,” self-certifying they used funds according to regulations, making the application process much simpler. (4) Loan processing fees are 5% for loans under $350K; 3% for all other loans . The new law also carved out additional benefits for restaurants, hotels, and other businesses under the NAICS Code 72. This guidance outlined the following set-asides for these businesses: The guidance outlines that the SBA will only accept loan applications from community financial institutions for at least two days after the loan portal reopens, and that it will engage in community and public outreach along with a media campaign to promote the program and encourage these groups to apply. The rules also now do not require borrowers to deduct any grants they received if they applied for the SBA’s other loan program, the Economic Injury Disaster Loans (EIDL). AllBusiness.com is one of the world’s largest online resources for small businesses, providing essential tools and resources to start, grow, and manage your business. h�b```�3���� ��ea����֝����auD��p֢��9Z����itt000vt40pt4@��4�b1�H(� �=�3�1L�̏��.3\g�c:�\���\Ϭ�7w���z�~�0/�o�i�����iF�� �XW8 i.&�UqF-� (�" Heard on: Despite the need for relief, businesses are finding it difficult to meet the eligibility requirements. The first round of PPP funding, which started in April 2020, ran out in a matter of weeks as a panicked business community quickly applied for loans. Businesses that did not apply for the grant or that did not receive the full amount can now apply. Additional Eligibility Criteria and Requirements for Certain Pledges of Loans for the Paycheck … These borrowers of less than $150,000, however, have to document the reduction in revenue upon applying for forgiveness. Borrowers still have to use 60% of the funds on payroll and 40% on expenses over … 90 0 obj <> endobj Paycheck Protection Program Round 3. %%EOF © 2021 Forbes Media LLC. Small businesses received $35B in PPP loans during third round of lending The figures are the first released by the SBA since the program reopened earlier this month Now businesses are able to get PPP loans and avail themselves of the tax credit, providing they can show a reduction of revenue of 25% or more in a quarter of 2020 over 2019. Even more helpful, businesses, sole proprietors, and independent contractors applying for loans of $150,000 or less and based on the same calculation as round one—2.5 times one month of 2019 payroll—do not have to submit new documentation if applying through the same lender. SBA Paycheck Protection Program Keeping you informed on the Paycheck Protection Program. The maximum loan amount across all locations, however, is capped at $4 million. The new program will open as soon as lenders can reestablish the process, and it expires on March 31, 2021. The tax credit is available in Q1 and Q2 of 2021 and is both refundable, meaning the IRS will send employers checks, and advanceable, meaning employers can apply for the credit in advance of paying their employees. Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan … The simplest method to do so, according to the regulations, is to submit 2020 and 2019 tax returns if available. Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5. These new groups include 501c(6) organizations like chambers of commerce, nonprofits and religious entities, and local news organizations. These businesses include theaters, museums, and zoos. See more of Neil’s articles and full bio on AllBusiness.com. The PPP will open to all participating lenders shortly thereafter. As with round one, borrowers must still attempt to keep their head count intact to the extent possible. Do I have to pay the loan … By incurring this tax burden, the government was, in fact, taxing PPP grants. $15 billion and $25 billion for first draw and second draw PPP loans, respectively, for borrowers with a maximum of 10 employees or for loans less than $250,000 to borrowers in low- or moderate-income neighborhoods. And, while those businesses that were or are temporarily closed due to the Covid-19 pandemic may apply for round two, those business that are permanently closed cannot. These businesses can calculate their loan amount by multiplying one month of 2019 payroll by 3.5 instead of 2.5, thus receiving more funds. These loans are also capped at $2 million. PPPr3 will likely be approved by Congress and the President within a few weeks of the exhaustion of PPP Round … Unlike the first round of PPP, however, while the method of calculating the new loans is the same, the new loans are capped at $2 million. This program allows employers to deduct up to $14,000 per employee on tax withholdings. In the meantime, the Economic Aid Act and new regulations improve PPP and expand it to those businesses that need it most. Justin Ho Feb 2, 2021. The US Small Business Administration and Treasury released borrower loan application forms Friday night, January 9, 2021 for the rebooted Paycheck Protection Program (PPP… Cash Flow Everything You Need to Apply for a Second-Draw PPP Loan Businesses that struggled to get their applications in during the first round often didn't have their paperwork hemmed up. Yes, this means that some businesses that previously received a PPP loan … In addition, the Economic Aid Act expanded the list of expenses from the original short list of rent, utilities, mortgages, and interest on existing debt, to include essential supplier costs, personal protection equipment, and operational expenses such as software, accounting, and cloud computing. 1 . The main takeaway is that any business that did not receive a PPP loan previously, or those businesses that experienced a 25% reduction in revenue in one quarter of 2020 over 2019, can apply for this new round of PPP. Under a new Republican proposal, businesses with 300 or fewer employees that took a 50% hit to revenues during the crisis would be able to get a second PPP loan. Food services and lodging businesses, such as restaurants and hotels, can get loans of 3.5 times their average monthly payroll, but the $2 million cap still applies. Writ large, the new PPP round has the same requirements for having the loan forgiven and turned into a grant. The SBA has issued new guidance on applying for the next round of Paycheck Protection Program funds. PPP Round 2: How To Apply For A First Or Second Draw PPP Loan; PPP Loans: 7 Lenders Offering PPP2 Loans … If not, quarterly financial or bank statements may suffice. The rules do provide the caveat that if a borrower cannot find employees to rehire, or if they are shut down due to Covid, they have a “safe harbor” and will not be penalized for a reduction in head count of greater than 25%. If you or your business received an initial PPP loan, you may qualify for a second round of funding, provided you meet the following requirements: Have no more than 300 employees. Opinions expressed by Forbes Contributors are their own. endstream endobj startxref 113 0 obj <>/Filter/FlateDecode/ID[<72BD8D12A4DCFA4199C3ABF274F10010>]/Index[90 65]/Info 89 0 R/Length 112/Prev 141015/Root 91 0 R/Size 155/Type/XRef/W[1 3 1]>>stream 154 0 obj <>stream Eligibility requirements for the second round of PPP … h�bbd```b``��SA$�1��P����) ��L.�k�I��b�Y0y,� L^�M �������Qb��m����1]&�{^��G�����M� 'H� You may opt-out by. The loans are 100% guaranteed by the federal government; The interest rate will be 100 basis points or 1%, calculated on a non-compounding, non-adjustable basis; Loans will be processed by authorized lenders who will be permitted to rely on certifications of the borrowers to determine the borrower’s eligibility and use of the loan proceeds. Due to effective lobbying by every business group in Washington, the new law fixed this problem and now expenses paid for by PPP funds are deductible. Phase 3 General Distribution supports providers who have been most significantly impacted by COVID-19, as measured by changes in their revenues and expenses from patient care; If a provider did not previously receive approximately 2% of annual revenues from patient care, they will receive this amount consistent with prior general distributions, plus their Phase 3 … The shortage of $245 billion will likely be funded by another round of PPP funding – PPP Round 3. The biggest change to Round 2 of the PPP is that it now distinguishes between first and second draws. The new regulations do give lenders the ability to request additional documentation from borrowers if they deem it necessary. And like with the first round, new regulations are certain to be forthcoming, especially around the outstanding issue of audits for borrowers over $2 million. These grants were anywhere from $1,000 to $10,000 depending on the number of employees. In addition, while first-time borrowers can have 500 or fewer employees as in round one of PPP, second-time applicants can only have a maximum of 300 employees. 1 of PPP loans: It appears that self-employed farmers (sole proprietorships) that did not qualify for the first round of PPP loan payments due to having a negative net farm profit on Schedule F of their 2019 Federal tax return may now apply for the first round of PPP loan … This criticism, harsh at times, was that small business of less than 10 employees, women- and minority-owned businesses, and those in economically disadvantaged areas, were shut out of the program while large businesses, chains, and publicly traded companies received funding. Yes. RELATED: Trump Finally Signs the Relief Act—10 Important Things You Need to Know. endstream endobj 91 0 obj <. PPP Round 3 Summary . A reduction in over 25% of salaries will result in a commensurate reduction in overall forgiveness. Important update: On February 22, the Biden-Harris administration announced that in order to provide equitable relief to hard-hit small businesses, the SBA will only accept Paycheck Protection Program (PPP) loan … The new PPP loans are largely subject to the same terms and conditions of the first round, including the following: Borrowers applying for a second round of PPP must also have used all of the first tranche of funds prior to or by the date of receiving new funds. Clarification on round No. $15 billion across first and second draw PPP loans for lending by community financial institutions; $15 billion across first and second draw PPP loans for lending by Insured Depository Institutions, Credit Unions, and Farm Credit System Institutions with consolidated assets of less than $10 billion; $35 billion for new first draw PPP borrowers; and. Virginia National Bank will be participating in this new round of PPP funding (referred to as “Round 3… Eligibility – “PPP Second Draw” or 3 rd Round of PPP … Generally speaking, this means your local or national bank, but credit unions and online lenders are also making PPP loans. The SBA also outlines the businesses that were not eligible to apply for the new round of PPP, including the following: Writ large, the new PPP round has the same requirements for having the loan forgiven and turned into a grant. Finally, businesses that received PPP loans were not eligible to also take the Employee Retention Tax Credit. Your PPP loan … Borrowers of loans in excess of $150,000 will have to document their reduction in gross receipts upon applying for round two of PPP. The Economic Aid Act also expanded the list of businesses that are now eligible to receive PPP loans. The SBA has determined that at least 25%of each of those set-asides will go to each one of the groups: loans to borrowers with a maximum of 10 employees and loans less than $250,000 to borrowers in low- or moderate-income neighborhoods. Kudlow over the weekend told CNN's Jake Tapper on "State of the Union" that a third round of PPP, which issues emergency loans to struggling small businesses, may be needed. This also applies to seasonal businesses and those without 12 months of operating history. If you were rejected in the first round or didn't receive funds, you have a chance to apply again for an initial PPP loan. 0 Some Businesses Can Get A Second PPP Loan. PPP loans outlined in Round 3 are guaranteed by the government, require no collateral or personal guarantees, and have an interest rate of 1% per year. All Rights Reserved, This is a BETA experience. Lobbying firms or those engaged in political or advocacy activities; Businesses based in or tied to the People’s Republic of China; Businesses lobbying or engaging in public relations for foreign clients and required to register their activities under the Foreign Agents Registration Act; Live entertainment venues receiving grants under the Economic Aid Act; Businesses in which the president, the vice president, the head of an executive department, or a member of Congress, or the spouse of such person owns, controls, or holds at least 20%of any class of equity; and.
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