TUCSON, Ariz. (KOLD News 13) - Additional coronavirus relief is on the way for small businesses.
The latest round of the Paycheck Protection Program opened Monday, Jan. 11, that includes $284 billion for additional lending to eligible businesses.
In the latest round, businesses that received loans last year will be able to borrow up to $2 million as long as they have no more than 300 employees and suffered at least a 25% drop in quarterly revenue. First-time borrowers with no more than 500 workers will be able to borrow up to $10 million.
The loans, which can be forgiven, will have five-year terms and carry an interest rate of 1%.
The SBA will initially accept only applications submitted by community financial institutions, or CFIs, lenders whose customers are minority-owned and economically disadvantaged businesses. Starting Monday, applications for first-time borrowers submitted by these lenders will be accepted, and on Wednesday, applications for second loans. The SBA said it would begin accepting applications from all its lenders within a few days of that initial period reserved for CFIs.
As with the first two rounds of the PPP, applications must be submitted online at banks and other SBA-approved lenders. All applications must be submitted and approved by March 31. Loan amounts are calculated using a company’s payroll expenses; businesses can use either their 2019 or 2020 payroll to compute how much they can ask for.
Restaurants can also apply for bigger loans equal to 3.5 times their monthly payroll compared to the 2.5 times average monthly payroll given in the first round
Key PPP updates include:
· PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
· PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
· The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
· The PPP provides greater flexibility for seasonal employees;
· Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
· Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
· Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
· Has no more than 300 employees; and
· Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Oscar Moreno with Lendio, a small business loan marketplace, said the Small Business Administration will be stricter on applications this time around.
“Typos, dates, expired identifications, all those glitches or mistakes could cause someone’s application to either be declined or delayed,” said Moreno.
The loan can now be used to cover supplier costs, other expenses needed to meet COVID restrictions.
Those waiting on money for the first time can apply now, and those looking to apply for a second round will be able to do so on Wednesday. The PPP will open to all lenders shortly after.