The American and Canadian governments continues to have an economic and political turmoil due to the raging pandemic across all its 50 states, but recently it has released interim financial guidance through the SBA on the next round of the Paycheck Protection Program (PPP), which is a vital relief for small business around the country, helping many businesses pick up and helping some from shuttering.
The SBA has, however, not yet released any new PPP application form so if you’re a business owner, you are not locked out just yet. The same application rules from the previous PPP form applications are still in place with minor changes such as clarification on issues that were vague in the past application forms. This is a good thing for small business owners as this means your application time will be faster than before and better news for you loaners and lenders as there will be even swifter repayment of loans loaned out to the small business owners.
Undeserved groups have also a big win as the first few days of opening of the portal are dedicated to applications from community financial institutions. This is a huge boost for these groups in minority-owned businesses, underserved communities and businesses that were locked out during the initial PPP application period. This was when credit facilities were being allocated and distributed. This will make capital easily accessible across the board and inclusive.
The second draw, however, has some new few additional requirements put in place. One is that the business owners who have already gotten funding from the initial round must have already utilized all the funding before the second disbursement commences. This is to make sure that only very needy businesses get this funding. The second new requirement is that the second draw is limited to small businesses with fewer than 300 employees instead of the initial 500. This is a huge boost to small businesses with very few employees as huge businesses with 500 employees also benefited in the initial round of the PPP.
There needs to be a comparison of financial time frames such as Q1 2020 vs. Q1 2019. You can still use your 2019 payroll for this thus simplifying the process for application. In this new PPP application, industries such as hotels, restaurants, caterers and bars are eligible to receive loans that are up to 3.5 times their payroll thus supporting expansion of their industries.
If you are a self-employed owner applying for the PPP, you can use your net income from the Schedule C provided. Moreover, you can apply for an employee’s income wages if you have employed one. Ranchers and small-scale farmers will utilize the Schedule F gross income and the wages for their workforce. When it comes to partnerships, requirements remain the same as during the last rounds. They will have to make applications at a partnership level and not on an individual basis. All in all, you as business owner should take time to ensure that you have the correct documents required for application between now and the beginning of the application period for a seamless and swift application.
