FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
QUALIFY AND APPLY FOR NEW PPP LOANS
16
HERE ARE GUIDELINES ON HOW TO
TCBusiness.com
Updated 20 Jan.: The SBA has released
guidance for new PPP loans available
under the Economic Aid to Hard-Hit Small
Businesses, Nonprofits, and Venues Act
the Economic Aid Act. This article includes
the latest guidance from the Small
Business Administration along with the
new application forms.
What are Paycheck Protection
Program Loans?
The Paycheck Protection Program PPP
loan is a type of SBA loan designed to
provide funds to help small businesses
impacted by COVID-19 to keep their
workers on payroll. These loans may be
completely forgiven if spent on eligible
expenses mainly payroll during a specific
time period.
Congress approved another $284 billion
in funding for these loans in the stimulus
bill enacted Dec. 27. See below for more
information on how to apply.
Please keep in mind this information is
changing rapidly and is based on our current
understanding of the programs. It can
and likely will change. Although we will
be monitoring and updating this as new
information becomes available, please do
not rely solely on this for your financial decisions.
We encourage you to consult with
your lawyers, CPAs and financial advisers.
To review your real-time funding options
with one of Nav’s lending experts, please
contact us.
As you read this, keep in mind that
for the most part, the changes included
in this legislation apply to all PPP loans
except those already forgiven. In addition,
the way the legislation is written, most
provisions take effect immediately after
the legislation is enacted, as if they were
in the CARES Act that was passed March
27, 2020.
What kinds of PPP loans are
available?
There is funding for three categories of
PPP loans in this legislation:
• First time PPP loans for businesses
who qualified under the CARES Act but did
not get a loan first draw PPP loans;
• Second draw PPP loans for businesses
that obtained a PPP loan, but need additional
funding; and
• Additional funding for businesses
that returned their first PPP loan or for
certain businesses that did not get the full
amount for which they qualified.
Certain news organizations, destination
marketing organizations, housing cooperatives,
and 501c6 nonprofits may also
be eligible for PPP loans.
For all PPP loans, no collateral or personal
guarantee is required. For these new
loans, any amount not forgiven becomes
a loan at 1% for five years. Loans issued
prior to June 5, 2020, have a maturity of
two years.
Who is eligible for the second draw
PPP loans?
Many small businesses and independent
contractors may be eligible for another
PPP loan if they received a previous PPP
loan, and qualify. First, similar to the first
rounds of PPP, eligible small businesses
may include:
• Small businesses, nonprofit organizations,
veterans organizations, Tribal
business concerns, and small agricultural
cooperatives meeting the SBA size standards;
and
• Sole proprietors, self employed individuals
or independent contractors.
In addition, applicants for second draw
PPP loans must also meet the following
criteria:
1. The business may not have more
than 300 employees; and
2. The business must have at least a
25% reduction in revenues in at least one
quarter in 2020 when compared to previous
quarters more details below.
Businesses with multiple locations that
qualified under the CARES Act may qualify
for a second draw provided they employ
fewer than 300 people in each location.
Affiliation rule waivers from the CARES Act
still apply.
Businesses must “have used or will use
the full amount of the initial PPP loan for
authorized purposes on or before the
expected date of disbursement of the
Second Draw PPP Loan.”
Certain types of businesses are not eligible
including most businesses normally
not eligible for SBA loans, businesses
where the primary activity is lobbying, and
businesses with certain ties to China. Note
the CARES Act made an exception for certain
non-profits and agricultural cooperatives,
for example, which are not normally eligible
for SBA 7a loans. Publicly traded companies
are not eligible to receive second draw
PPP loans.
How is the 25% reduction in
revenues calculated?
Business owners will compare gross
receipts see definition below of the business
for any quarter in 2020 to the same
quarter in 2019 to determine if revenues
decreased by at least 25%.
Remember, this calculation applies to
second draw PPP loans, not to first draw
PPP loans.
What if you weren’t in business all of
2019? Stick with us. This sounds more
complicated than it really is:
If you were not in business during the
first or second quarter of 2019 but were in
business in the third and fourth quarter of
2019, then you may compare any quarter
in 2020 with the third or fourth quarter of >>
BY GERRI DETWEILER
Gerri Detweiler is a leading, nationally
recognized financing and credit
expert, with more than 20 years of
experience. During the 2008/2009
financial crisis, Detweiler was interviewed
hundreds of times, providing
insightful expertise and actionable
advice for traversing the turbulent
landscape and unknown change.
Today, she is education director for
Nav, the trusted financing partner
of more than 1.2 million businesses,
where she gives Nav’s customers certainty
in an uncertain world through
expertise and actionable advice.
/TCBusiness.com