What Small Businesses Need To Know About The 2nd Round Of PPP Loans
For millions of small businesses that are still struggling because of the pandemic - there is good news coming out of the White House this past week (how great does THAT feel to read?!?!), The Biden Administration is modifying the new PPP rules.
For two weeks in late February/early March, *ONLY* small businesses with fewer than 20 employees can claim pandemic relief loans.
.. AND they are making it even easier for solo entrepreneurs, and immigrants who have their tax ID to get a loan. During the last round, there were even restrictions on small business owners who had outstanding college debt and that is gone.
So, if you are a small business owner -- OR you know one, listen up:
Round 2 of the SBA’s Paycheck Protection Program (PPP) started in January 2021 — based on the Bill that Congress passed in December 2020. But for the next two weeks, local banks, credit unions, and online lenders such as Kabbage (get all the info from them here: https://www.kservicing.com/ppp-loan/) & biz2credit (https://www.biz2credit.com/disaster-support/cares-act-loans-coronavirus) are ONLY focusing on genuinely small businesses with less than 20 employees and small minority-owned businesses.
So, this means the “little guys” can have better access to lenders who can answer their questions and help them get these loans that are meant to keep small businesses going during this terrible crisis.
How This Round of Small Business Forgivable PPP Loans is different:
This round of funding is for ALL small businesses. Originally the idea was that business owners could get their loans forgiven if they used at least 60% of the money to cover payroll costs. But as we may remember, the first round was problematic with large (white-owned) companies getting a huge chunk of the money, with BIPOC small business owners having a harder time even getting meetings with lenders. It also wasn’t a cure-all for small businesses that did get the loans.
Others, like myself, didn’t think they could get a PPP Loan because as sole proprietors and independent contractors, we don’t have employees. And for those that did get a loan, many received really small loans (because the numbers were based on how many employees a business had).
This round understands that not every small business that needs help has employees. Here is a great breakdown of how the PPP Loans & forgiveness work for self-employed people.
Businesses may now get a second PPP loan. Businesses that got a PPP loan when the program first went into effect now may apply again, as long as they can show at least a 25% drop in gross receipts in the first, second or third quarters of this year compared to the same quarter in 2019.
Restaurants & hotels can get bigger loans. Let me repeat this because THIS is super important to many of my friends in the hospitality business: Restaurants and hotel businesses may now apply for loans equal to 3.5 times their monthly payroll. So, thankfully this can provide some relief to my food and hospitality friends.
More flexibility in how PPP funding can be used. We now know that businesses need more help than just covering employee payroll. So there is more leeway for small businesses to use the loans AND have them forgiven. Here is a great list from Nerdwallet of some of the ways the PPP Loans can be forgiven.
The forgiveness process is simplified. In order to have a PPP loan forgiven, businesses that borrowed $150,000 or less will simply need to submit a one-page certification that includes the number of employees the business retained as a result of the loan, an estimate of how much of the loan was spent on payroll and the total loan amount.
So, if you are a small business owner reading this, pick up the phone, Click on one of the links above to an online lender, connect with a local nonprofit to help (like the United Way, Working Solutions, Latino Service Providers or the SBDC), or GO to your local bank to discuss the PPP loans with them in more detail.
Also, please share this news with small business owners who were weary of the first round. The Biden Administration changed up the rules specifically to help them. ❤️ (also, note… I am NOT an expert on any of this, but I wanted to understand it better so I dissected the new info about the second round of PPP Loans. If I am missing anything, please let me know).
