Congress recently approved $284 billion for additional Paycheck Protection Program loans. As an extension of last spring’s Paycheck Protection Program, the loan is designed to help small businesses continue to keep employees on the payroll. Here are a few things you need to know:
What You Need to Know
- The loan is forgivable if at least 60% is spent on payroll expenses and 40% or less is spent on other approved expenses.
- The loan is available to borrowers that have previously received a PPP loan, but you cannot receive more than two.
- The new loans are capped at $2 million and must be used in 8-24 weeks.
- March 31st is the deadline to apply for the new loan.
Who is Eligible?
To qualify for this round of PPP funds, you must have been in business prior to February 15th, 2020, have fewer than 300 employees, and the business’s gross sales must have declined by at least 25% in any quarter of 2020, compared to 2019. If you previously received a PPP loan, you may be eligible for a second if the business has used the full amount on approved expenses.
First and Second Round Borrowers
In the first round of PPP loans, businesses with 500 employees or less could qualify for the loan. In this second round, the PPP loan is available to businesses with 300 or less employees. This time, loans are capped at $2 million, rather than the previous $10 million. Both rounds can be used for overhead and payroll and are forgivable if used on approved expenses.
How to Apply
Make sure to take advantage of these tax deductible loans while you can. Begin by contacting potential lenders and find a lending source. Keep good records and ensure you can prove at least a 25% decrease in gross revenues. Lastly, pay attention to deadlines and apply as soon as possible. To see what information will be needed for the application, click here.