Earlier this month, the Small Business Administration officially opened up the Paycheck Protection Program (PPP) for a second round of funding, while also simplifying many of the processes and rules in place that guide it. As we begin to see the light at the end of the tunnel for the COVID-19 pandemic, we know this fresh infusion of funding can offer a needed bridge for many businesses trying to navigate these challenging economic times.
Unlike the first installment of PPP, which was rolled out quickly to help get cash in the hands of businesses in need, this new round of funding features more defined rules and important clarity that will aid potential borrowers in the process. If you’re interested in seeking a first or second PPP loan, here are five things you should keep in mind:
- You might be eligible for a second PPP loan. Businesses and organizations are eligible for a second draw of PPP funding to assist with payroll costs, mortgage, rent, utilities and more. If you’ve previously received a loan, you can seek a second loan if your business has fewer than 300 employees and can demonstrate at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020.
- Your organization now may now qualify for its first PPP loan. Organizations like chambers of commerce, housing cooperatives and other non-profit groups are eligible to seek PPP loans. Additionally, local newspapers are now eligible to seek funding. If you missed out on the first PPP loan for any reason, it would be worthwhile to revisit it.
- Your application might face more scrutiny. There was ample public outcry regarding large, multi-national companies securing PPP loans during the first round of funding, as well as less-than-honest entities and organizations seeking funding. As a result, there are tighter controls put in place, as well as a more rigorous monitoring of the PPP process. It will be important for you to demonstrate need to avoid any allegations of fraud.
- You can benefit from greater rules clarity. The recent stimulus act provided much-needed clarity around the loan-forgiveness process, including a rule allowing for the deductibility of business expenses from PPP funding. Additionally, it provided a simplified loan-forgiveness form for small businesses.
- You need to act fast. The last day to apply for this second round of funding is March 31, 2021, and don’t underestimate the amount of time that may be needed to gather the required documentation such as quarterly revenue comparisons and complete the application process.
At Padgett, we’ve helped more than 1,000 clients secure nearly $60 million in PPP funding during the first round of the program, and have a trusted network of CPAs, Enrolled Agents and other tax professionals who can answer any questions you might have about the process. Visit our COVID-19 resources page for other helpful tips that might aid your business, and don’t hesitate to contact our Padgett office.