Additional PPP loans, EIDL grants, Pandemic Unemployment benefits and other small business relief are arriving in 2021. The total allotted for these new PPP loans is just more than $284 billion. As with the first round, businesses may be qualified for full loan forgiveness if portions are correctly spent within a certain time frame.
Please be advised that the information is changing quickly and is based on recent information on the programs. It can and is expected to change. The Foresight team will be checking and revising as new information becomes available. It is strongly suggested that you do not rely solely on this for your financial decisions. Continue reading below as we answer some popular questions related to the new program.
Who is eligible for the new PPP Loans?
Many small businesses may be eligible for the new PPP loans. You could also qualify for a second loan if you received funds in the first round of PPP. New applicants are welcome as well as long as they match the qualifications. Just like the first round of PPP, eligible small businesses may include:
- Small businesses that meet the SBA size standards
- Self-employed individuals or independent contractors
The second round of assistance is intended to focus on smaller businesses impacted by the pandemic. As a result, applicants must also meet the following criteria:
- The business may not have more than 300 employees and
- The business must have at least a 25% reduction in revenues in at least one quarter in 2020 when compared to revenue from previous quarters
Also, any business that received their first PPP loan must have used, or plan to use, their complete PPP loan already received.
How is the 25% reduction in revenues calculated?
Business owners will assess gross receipts of the business before expenses are deducted. They will compare those for any quarter in 2020 to the same quarter in 2019 to define if revenues reduced by at least 25%. As a reminder, the first quarter runs January 1 – March 31, the second quarter runs from April 1 – June 30, the third quarter runs from July 1- Sept 30 and the fourth quarter runs from October 1 – December 31st.
How much can I receive with the new PPP loans?
The highest loan amount is $2 million. As prior, a business may qualify for up to 2.5 times average monthly payroll costs.
Can I reapply for a loan if I returned my first one?
The answer to this is yes. If you returned all or part of your PPP loan, you may apply for an “amount equal to the difference between the amount retained and the maximum amount applicable.” If you did not accept the full amount you may request an adjustment to allow you to borrow the full amount for which your business is eligible.
Is there loan forgiveness for the new PPP loans?
The answer to this is also yes! As with the first round of PPP, these loans may be entirely forgiven if spent for the appropriate purposes during the appropriate time period.
Borrowers can continue to use the same forgiveness forms for PPP loans they received earlier in 2020, until new applications are released.
In addition, and as a relief to business owners, there will now be a simplified forgiveness for loans of $150,000 or less. Unfortunately, that is not automatic yet.
How must I spend the money?
Like the first round of PPP, this program is largely aimed to keep employees on payroll and to pay other specific expenses.
To attain full forgiveness, borrowers will need to spend at least 60% of loan advances on payroll. Borrowers may spend up to 40% on other eligible expenses, during the covered period including:
- Mortgage interest
- Covered operations expenditure (business operations software)
- Covered property damage cost (any damage not already covered by insurance)
- Covered supplier cost
- Covered worker protection expenditure**
**Covered worker protection expenditure means “an operating or a capital expenditure to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et 8 seq.) with respect to the Coronavirus Disease 2019 (COVID–19) expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19; may include the purchase, maintenance, or renovation of assets that create or expand:
- a drive-through window facility
- an indoor, outdoor, or combined air or air pressure ventilation or filtration system
- a physical barrier such as a sneeze guard
- an expansion of additional indoor, outdoor, or combined business space
- an onsite or offsite health screening capability
Please be advised that these approved expenditures apply to new PPP loans not those already forgiven. Also, the “covered period” starts when the PPP loan is originated or to put it simply, the date the funds are deposited to your bank account. You are allowed to select a covered period of 8 or 24 weeks to spend the funds.
Will an EIDL Grant be deducted from my PPP for loan forgiveness?
The answer to this question is no. The legislation rescinds the requirement that an EIDL grant be deducted for purposes of PPP forgiveness.
Where can I get the new PPP loans?
We have learned that not all lenders from the first round will participate this time around.
As we continue to navigate through these times of uncertainty and adapt, we here are at The Foresight Companies want to be your source for all topics related to your business operations.
Please visit our COVID-19 Business Operations Resource Center frequently for updates.
*Please note that as information is updated and modified, terms and conditions are subject to change