The latest $900 billion coronavirus relief bill – the one with those much anticipated $600 stimulus checks -- includes a second round of funding for the Paycheck Protection Program (PPP), which saved thousands of jobs earlier on in the pandemic with its forgivable loans. Specifically, there's $284 billion to be dished out in PPP funds, and if you're eager to get a piece of that action, here's what you need to know.
The program reopens on Jan. 11 -- but only partially
During the first round of PPP loans, the application process was utterly chaotic. Countless small businesses found themselves scrambling for loans, overloading banks' application systems and causing panic. This time around, the Small Business Administration (SBA) and Treasury Department are (thankfully) doing things differently. On Jan. 11, community banks and credit unions will be able to start accepting PPP loan applications. But businesses that plan to apply with larger banks and lending institutions will need to wait. As of this writing, there's no set date for when those applications can be submitted. You may actually be better off applying for a PPP loan with a community bank -- even if it's an institution you don't have an existing relationship with.
It's possible to apply for a second loan -- but you need to qualify
During the first round of PPP loans, businesses simply needed to certify to economic uncertainty to qualify for funding. This time around, the SBA wants to see proof of financial struggles. Specifically, your business will need to have experienced at least a 25% reduction in revenue in at least one quarter between 2019 and 2020. Also, you'll only qualify for a second round of funding if your headcount is 300 or under. And during this round, loans are capped at $2 million or 2.5 months of payroll costs -- whichever is lower. However, if you're in an industry that was especially hard-hit during the pandemic, like the restaurant business, you'll be eligible for 3.5 months of payroll.
You can apply for a loan if you didn't get one the first time around
Having an initial PPP loan application rejected doesn't disqualify you from applying during this second round. If you're applying now for the first time, you'll be eligible for up to $10 million or 2.5 months of payroll expenses -- the lower of the two. Also, you can apply if your employee count doesn't exceed 500.
You have until the end of March to apply -- but you shouldn't wait
Under this latest round of PPP funding, businesses have until March 31 to apply for a loan. But you're better off getting your application in much sooner, because while Mac. 31 may be the deadline, once that $284 billion in funds runs out, you're out of luck. Many businesses were shut out during the first round of funding (though the program eventually got more money that allowed loans to open up), so don't fall into that trap.
Given the way so many small businesses have been impacted by the ongoing pandemic, a fresh round of PPP funding is pretty much a lifeline. Do what you can to get a piece of that money -- before it's off the table.