The Small Business Administration is now offering government-subsidized PPP loans as part of this year’s $284-billion aid package. This program is intended to assist small businesses that are at the highest risk of going under.
While the last round of PPP (Paycheck Protection Program) loans allowed the nation’s largest banks access to funds before community banks, this round ensures that roughly 5,000 credit unions, local banks, and farm credit banks will be the first institutions permitted to ask for funds. Furthermore, this wave’s funds will first be granted to businesses in regions classified as low-income, minority-owned businesses, and businesses identified as being at a disadvantage relative to their competition.
Our country has lost nearly 150k jobs in less than a year as a direct result of the pandemic, thus an additional wave of PPP is urgently needed. If your small business is one of the hundreds of thousands in need of a loan to remain afloat, you should definitely consider applying for relief.
Even if you were granted relief under the last round of PPP, you may be able to receive further assistance. Until now, no businesses have been permitted to request additional loans. Under the new rules, however, small businesses can request an additional loan to keep workers paid and insured.
Q: Is my business eligible for a 2nd loan?
A: If your business has fewer than 300 employees AND your revenue has decreased by at least 25%, you are eligible for a second loan. If your loan does not qualify for forgiveness, the interest rate will be 1%.
Q: What length of time will my loan cover?
PPP loans can cover anywhere from 8 to 24 weeks, depending on your business’s requirements.
Q: What can I pay for with my PPP loan?
These new rules permit funds to be spend on operations, property damages, worker protection, and money owed to suppliers. Therefore, even if you have very few employees, you can petition the government on the basis of your business’s other expenses.
Q: How long will it take for my loan request to be granted?
A: Funding has already been distributed to banks, so your request should be processed and funded rapidly. The sooner you file your paperwork, the sooner the funds will arrive in your account.
Loans can’t be approved immediately; the government has installed automated identity verification and business data verification, but hasn’t specified the details of these checks, nor outlined exactly how long they will take.
The good news is that this round of PPP loans has been amply funded, meaning that the money is highly unlikely to run out. In April of 2020, businesses were turned away despite great need because the government did not ensure that a) small businesses were tended to first and b) funds were sufficient. This round, every small business who meets the requirements listed above can expect assistance.