about $ 130 billion in PPP funds remain available, even for businesses that have reopened
little businesses still have until August 8 to apply for potentially excusable loans via the Paycheck Protection Program ( PPP ), which was extended from its original June 30 deadline. While a irregular PPP is under retainer in the Continuing Small Business Recovery and Paycheck Protection Program Act, depart of the HEALS Act in the Senate, it ’ second more restrictive and the available amounts are smaller. The law ’ randomness adoption is far from certain, but it does at least set the minimum provisions around the negotiations in Congress for a moment PPP .
To find out what small-business owners and nonprofit executive directors need to consider before submitting a PPP application, and what respite course of study could be following to apply for, I sought insights from Greg Reibman. He ’ s the president of the Newton-Needham Regional Chamber in the suburb west of Boston, and in that function he regularly fields questions from businesses about PPP loans .
1. What’s the attitude of local small companies to the PPP? Has it changed since the deadline was extended to August 8?
The PPP rollout was very frustrating. The rules were obscure. We ’ rhenium at about 50 FAQs on the PPP from the US Small Business Administration ( SBA ). That gives an indication of how often the feds have had to update their guidance .
All that said, the PPP has been a life buoy for many of our businesses through the spring and summer. We ’ ra recommending that businesses or nonprofits that have not yet applied should strongly consider doing thus before the August 8 deadline. If you follow the spend rules, your entire lend can be forgiven, meaning you don ’ t have to pay it back. But you do need to be sure you understand the requirements and stay on acme of any changes .
And as of July 31, the SBA said it still has $ 130 billion left to lend. Most of the most recent applicants “ are the smallest of the minor, ” according to one SBA official. indeed if you haven ’ deoxythymidine monophosphate applied because you may not have thought your operation international relations and security network ’ t boastfully enough, go for it !
2. The PPP has been extended before. Might it be extended beyond August 8?
There ’ s a saying here in New England, attributed to Mark Twain : “ If you don ’ triiodothyronine like the weather, barely wait a few minutes. ” The lapp seems to apply to the PPP rules and deadlines. Given that there ’ s $ 130 billion left ( any unallocated money would go back to the US Treasury ), I suppose an extension is potential. But why gamble it ? apply immediately .
however, since you asked, both the House Democrats and the Republican Senate have proposed a PPP extension through the end of 2020 and some revisions .
The House plan expands PPP eligibility to include all nonprofits and local news program broadcast entities. It besides expands excusable expenses to include PPE and employee protection costs related to Covid-19 .
The Senate plan expands excusable expenses to include cover supplier costs, covered worker protection expenditures, certain operations expenditures, and group insurance costs that are function of payroll costs. It besides expands PPP eligibility to include : Chambers of Commerce ( we like that ! ), address marketing organizations, quasi-government entities, and other 501 ( carbon ) ( 6 ) organizations, with some caveats. [ See a section-by-section compendious of the Senate version. ] 3. As it seems there will be a new PPP program soon, should a company still try to apply before August 8? Or is there is no rush?
first, your wonder assumes that our leaders in Washington DC will agree to something ! I ’ thousand never that optimistic. But even if they do, some businesses may be eligible for both PPP 1 and PPP 2. so, while I hate to sound like a break record, apply for PPP 1 now. then hope PPP 2 comes along in case you need it a well .
What may be helpful, besides, is that back in June the SBA revived its Lender Match on-line tool to help underserved and disadvantaged little businesses and nonprofits. In its news release, the SBA described the joyride as a resource for “ pandemic-affected humble businesses who have not applied for or received an approved PPP loan to connect with lenders. ”
And for those of you who ’ ve received a PPP 1 loan and are crossing your fingers hoping a second gear PPP round becomes available, know that under the US Senate ’ s just-released stimulation plan, not every business which received the first round would qualify for the moment. Under the GOP plan, loans would be limited to small businesses with 300 employees or fewer ( quite than 500 or fewer under PPP 1 ). Funds would besides be set aside for businesses with 10 or fewer employees .
You ’ d have to demonstrate at least a 50 % tax income decay in the first or second base quarter of this year, compared to the lapp one-fourth final class. The original PPP has no requirement to show a specific tax income decline, although you need to make certain certifications, such as on business necessity for the excusable loanword .
4. What else appears to be the difference between the first PPP, with the application deadline of August 8, and the new one that may become law, assuming the Senate GOP version is the general outline of the next PPP?
As with the original PPP, your utmost loan size would equal 2.5 times average total monthly payroll costs. however, the loanword is capped at $ 2 million. Businesses that received a PPP loanword may not receive another PPP lend that aggregates to more than $ 10 million, the utmost under the original PPP .
here ’ s the good separate : Under PPP 2, businesses could use the funds to purchase protective equipment for employees and customers, including masks and sanitizers. They ’ d besides be able to use their funds for update public discussion. A one-page summary from the Senate explains more about the PPP Second Draw Loans and the PPP improvements in this potential new police .
5. The first PPP, with the August 8 deadline, still has funds. Is there a list of banks or websites that still want applications?
An SBA official here in New England said there was silent $ 130 billion left in the fund as of July 31. That number surprised me, given that June 30 the agency reported having about $ 132 billion in unallocated funds. sol yes, there ’ mho still billions of dollars available. This tool on the SBA ’ s web site can help you find an eligible lender .
[ The most recent SBA data, dated July 24, reports that over 5,005,261 loans have been made from 5,458 lenders and confirms that the PPP still has about $ 130 billion in unallocated funds. ] 6. If you don’t want to pay a lawyer or accountant to do the initial PPP loan application , given the August 8 deadline, how hard is it to understand and do yourself? Is there any way to get free guidance on what to do?
From what I ’ ve hear, most modest businesses have been able to apply barely with the serve of a local banker, but in truth it ’ randomness going to depend on your circumstances, how much time you have, and your ability to dig out some fiscal history. The trickier part may be after you get the loanword. You want to make sure you follow the rules so you can exercise the forgiveness features. This would mean you wouldn ’ t have to pay any or most of it rear .
Check with your local SBA office for a list of partners who offer detached advice. Or search on-line for one of the many webinars or how-to articles presented by police firms, account firms, and others. fair be indisputable and select a credible informant.
7. If a small business has reopened and generated revenue, can it still meet the qualifications for a PPP loan?
Yes. Your business does not need to be closed to apply. In fact, this program is truly designed to help you loose and stay open during this down period .
8. Are these SBA loans really forgivable and tax-free? If you qualify for loan forgiveness, you don’t need to pay it back?
Yes, vitamin a long as you cautiously follow the guidelines and spend restrictions .
9. The rules seem to have loosened since the first PPP was announced and launched. What’s different now in how and when a business can spend the money?
This is actually review news. In June, the House and Senate both overwhelmingly agreed to revise the platform with the Paycheck Protection Program Flexibility Act. This law lowered the part of the PPP loanword that must be spent on payroll to 60 % from 75 %. The rest must be spent on lease, utilities, and early business-related expenses. That law besides did the following :
- Extend from 8 to 24 weeks the amount of time you can use the funds while remaining eligible for loan forgiveness
- Extend from 2 to 5 years the time new PPP loans must be paid back if the amount provided doesn’t convert into a grant (i.e. the forgivable part of the loan)
- Loan forgiveness remains possible if former employees won’t come back to work, or if revenue in December 2020 is below February 2020 levels
- Payroll tax deferment is now allowed too
The Continuing Small Business Recovery and Paycheck Protection Program Act does not change these rules, if you ’ re eligible to get a excusable loanword under it. And as I mentioned above, in Question # 2, some in Congress want to expand eligibility even further .
10. Must companies use the PPP loan funding only for payroll to make it all forgivable?
up to 40 % can be spent on non-payroll expenses .
11. On July 6, the US Treasury and Small Business Administration (SBA) released the names and loan data of over 650,000 businesses that received forgivable Paycheck Protection Program (PPP) loans of more than $150,000. What’s the attitude and response of the companies in your area when their names appeared on this list?
Oh son, this is a slippery one. There ’ randomness been multiple complaints that the data the SBA released was faulty or draw faulty conclusions. I in full appreciate the motivation to be diaphanous with how taxpayer dollars are spent, but this process was flawed at best
[ For more about protecting your occupation from negative promotion about taking a PPP lend for coronavirus fiscal relief, and besides individually prevent fraud accusations, see my Forbes.com articles Paycheck Protection Loan Backlash : How To Defend Your Business Reputation And Avoid Getting Shake Shacked and Federal Charges Of PPP Loan Fraud Are here To Remind You These Loans Are not “ Free Money ”. ] 12. I’ve heard that after you get the loan funds, the application for loan forgiveness is much longer and more challenging. Is there any short form of it? Will this change also when there’s the new PPP?
There are two applications that you can choose from to complete. One is a “ borrower-friendly ” application and a branch phase, dubbed by the SBA as the “ EZ version ” .
According to the SBA, three quarters of all applicants can use the EZ translation. here are the requirements :
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to Covid-19, and did not reduce the salaries or wages of their employees by more than 25%
Continuing the Small Business Recovery and Paycheck Protection Program Act would besides simplify the forgiveness application and documentation requirements for smaller loans under $ 150,000. You would not need to provide documentation required by the CARES Act. It does not quite make loanword forgiveness automatic. You must attest to a good-faith effort to comply with Paycheck Protection Program lend requirements, you have to retain relevant records for three years, and you may need to complete and submit demographic information .
Borrowers with loans between $ 150,000 and $ 2 million besides do not need to submit the documentation but must but must complete the documentation required by the CARES Act. To ensure against imposter, the SBA can still audit and review loans of any size. [ For more details on loan forgiveness, see section 104 in the section-by-section summary of the Senate bill. ] 13. Do I need to rehire all of my employees to make the loan forgivable? Can I still fire, or give bonuses to, those that work for me?
You do not need to rehire all the employees you laid off, or restrict your fire or honor of employees, which is confirmed in SBA steering .
14. Can a nonprofit or charity apply for the PPP? Would it be a forgivable loan? Are the rules different?
Yes, 501 ( cytosine ) ( 3 ) nonprofits are eligible, following the lapp rules.
15. How does the Economic Injury Disaster Loan (EIDL) Emergency Advance differ from the PPP?
PPP lend recipients are besides eligible to participate in the recently reopened EIDL course of study, a long as the two loans are for different purposes ( so you don ’ t use the EIDL for payroll ). While you must apply for a PPP loan through an SBA-approved lender, you must apply for EIDL directly through the SBA. You will hear immediately from the SBA via electronic mail. Landlords and nonprofits are eligible for EIDL. This is big, since landlords couldn ’ thymine enforce for PPP. The “ EDIL Advance Program ” is closed .