Under the Covid-19 Relief Act passed by Congress in December a new round of Paycheck Protection Program (PPP) loans has been approved. Some companies are eligible for a second compliant loan with some of the the rules are changing for the better.
The bill includes total of $ 284.5 billion in PPP loans with a focus on areas with low to middle income. Specially named congress $ 137 billion in second draw loans as part of an on 27.
When will the PPP loans be available?
The paycheck protection program is operated by the Small Business Administration (SBA), however the loans are provided through local lenders. In a statement by the SBA says its loan portal is now open to First Draw PPP loan applications from participation Community Financial Institutions (CFI) which made up about 10 percent of the participating lenders in 2020. A PPP loan with First Draw is for borrowers who not yet received a PPP loan prior to the end of the program in August 2020.
Participating CFIs can submit application information for Second drawing PPP loans start January 13th. A second drawing PPP loan is for certain eligible borrowers who have previously received a PPP loan.
PPP loan applications for the first and second drawing of more lenders will open a few days later.
SBA plans to set aside specific times for processing and assisting the smallest PPP lenders with loan applications from eligible small businesses.
Companies that want to use the program need to act and obtain the necessary documentation because the program ends on March 31, 2021
How to Apply for the Paycheck Protection Program
For small businesses applying for a PPP loan must submit documents to review their payrolls and lost income. The documents include tax forms, bank statements and a color copy of government identification. Applicants for a The second-drawing PPP loan can avoid paperwork by using the same lender as the first-drawing loanif the company is using the 2019 payroll numbers.
Apply for borrowers $ 150,000 or less does not need to show any lost revenue when requested For a PPP loan, however, you need to do so in order to apply for loan waiver. The business would have to Fill out a one-page form from the lender Estimate of the total amount of loan that has been spent on eligible expenses. Such borrowers would have to, however show that they have restored the salaries and wages of full-time workers at levels before February 15, 2020.
Business owner who Borrow more than $ 150,000 must show that same documentation as in the first round of PPP loans. This includes showing how the money was spent, including wage and personnel costs, operating costs, and supplier costs. In the second round, additional expenditure for the issuance of PPP loans will be considered.
The rules for obtaining a PPP loan
The biggest selling point of the PPP lending program is that PPP loans are forgivable. To get forgiveness you have to have a business Certain expenses are incurred during a period of 8 or 24 weeks after receiving the loan, the business determines the period. The loan is granted when an employer documents that the money has been used properly.
The same core issues will continue to be included in the award calculation. These include Payroll and related costs such as Rent and Mortgage Interest as well as Group health insurance. This time companies can also be new Expenditures related to last year’s unrest that were not covered by insurance and any costs incurred for Regulatory compliance for the Covid-19 pandemic.
The award calculation is still pending 60 percent for payroll and 40 percent for non-payroll. Due to rule changes, some borrowers may be eligible to borrow more than the previous PPP loan if you have not withdrawn the full amount available to you. These companies can go back to their lender and have their original loan value changed, regardless of whether the loan is fully paid off or not. as long as they haven’t already asked for forgiveness.
If the loan is not granted, these loans would have one Interest rate of 1% and a term of five years. Loan payments are Postponed 10 months after the end of the insured period or when you receive a forgiveness judgment whichever comes first.
To find out which companies are eligible and how much money a company can apply for Click here.