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Contact UsOn Wednesday, February 24, the Biden administration announced major changes to the Payroll Protection Program (“PPP”). PPP provides forgivable loans to businesses adversely impacted by the COVID-19 pandemic. The changes announced on Wednesday are designed to benefit and get payroll assistance funds into the hands of small businesses. For a two-week period beginning February 25, 2021 and running through March 10, 2021, the Small Business Administration (“SBA”) will be accepting PPP applications only from small businesses – those businesses with fewer than 20 employees. The SBA is encouraging approved PPP lenders to reach out specifically to minority- and women-owned business, as well as sole proprietorships and independent contractors.
The changes announced on Wednesday also affect how the loan amounts are calculated. Instead of net income, the available loan amounts will be calculated using the applicant’s gross income as shown on Line 7 of Form 1040, Schedule C instead. Applicants are still required to show a twenty-five percent (25%) loss in revenue during 2020 compared to the same calendar quarter during 2019 in order to qualify. For PPP loans of less than $150,000, applicants are not required to provide proof of lost revenue at the time of application. However, proof of lost revenue will be required at the time of loan forgiveness. Applicants for loans of less than $150,000 will also benefit from a simpler, one page loan forgiveness form.
Applicants who were previously awarded PPP funds can apply for a “second draw” loan so as long as they meet the eligibility requirements noted above. According to published reports, there is approximately $143 billion in PPP funding still available.
If your current lender or financial institution does not offer PPP loans, the SBA has a website that matches applicants with approved lenders: https://www.sba.gov/funding-programs/loans/lender-match. More details about the Payroll Protection Program can be found on the SBA’s website: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
There are other programs that might be of assistance to small businesses during these unprecedented economic times such as:
- Economic Injury Disaster Loans: https://www.sba.gov/funding-programs/disaster-assistance/economic-injury-disaster-loans
- Employee Retention Tax Credit: https://www.irs.gov/coronavirus/employee-retention-credit
If you have any questions regarding how this program will effect you or your business, please contact Attorney Erica Yoder