As part of the Coronavirus Response and Relief Supplemental Appropriations Act, Congress renewed the Paycheck Protection Program and PPP loans. The so-called “PPP 2.0” will offer expanded qualifying standards to provide targeted funding to smaller businesses. These new PPP loans will have the same low rates, limited SBA requirements and loan forgiveness for qualified payroll expenses as the original PPP loans in the CARES Act.
The new Paycheck Protection Program does require businesses to prove that their business suffered at least a 25% drop in revenue during one quarter during 2020, but business owners do not need to prove that their business suffered long-term economic or physical damage to qualify. In addition, forgivable payroll costs include compensation, benefits, rent, and utilities, providing critical funding to struggling businesses.
There’s a new Paycheck Protection Program and its PPP loans have expanded requirements to protect funds for smaller businesses. Here’s what you need to know:
Interested in a PPP Loan? Get connected with a PPP lending partner today.
The new Paycheck Protection Program has stricter regulations to help more aid get to smaller businesses. You may qualify for the second round of PPP loans if your business:
If your business has more than 300 employees or did not experience the required 25% drop in revenue, you may be wondering if there is other funding available for your business. The short answer is yes, you may qualify for a business loan or other financing. A working capital loan, line of credit or equipment loan might be what your business needs to operate or even grow through the pandemic.
Get started with a Credibly application to learn more about your business funding options.
PPP loan amounts will be calculated in the same way as the original Paycheck Protection Program: 2.5 times your business’s monthly payroll costs with a maximum of $2,000,000.*
Payroll costs include compensation and other related costs like retirement payments, state and local taxes on payroll, payment for vacation or paid leave, group healthcare costs, and allowances for separation or dismissal.
PPP loans are designed to help small businesses and private nonprofits maintain payrolls and related payments. Therefore, 60% of the loan must be used for qualified expenses:
The remaining 40% of the loan may be used on qualifying non-payroll expenses, including:
This list of qualifying non-payroll expenses has been expanded to accommodate for unique expenses incurred by businesses operating during the pandemic. This expanded list of qualifying expenses applies to all PPP loans except for those already forgiven.
No more than 40% of the forgiven amount can be used for non-payroll costs like mortgage interest, rent, and utilities. If your business has laid off employees, that will also affect how much your loan can be forgiven.
To receive loan forgiveness, a borrower must apply to their lender with documents verifying payments and payroll details (number of employees, pay rates including IRS payroll tax filings and state income, payroll, and unemployment insurance filings). These documents must be certified from a representative of the business that the information is true.
PPP loan payments that are not forgiven are deferred for the first 6 months. Payments can be deferred up to 12 months for borrowers who qualify.
Yes. You can qualify for a PPP loan even if you already have existing financing (including other SBA loans). That said, you cannot use the funds from PPP loans and other loans for the same use, at the same time. For example, if you use a disaster loan (EIDL or loan advance) to pay your business’s rent in a given month, you cannot also apply for a PPP loan to cover that month’s rent.
Yes, as long as you meet the new criteria and have used your previous PPP loan funds. When the Paycheck Protection Program closed in August, many small businesses were still looking for funding help, but had already taken “their share” of the initial PPP offering. Now, smaller businesses can qualify for a second PPP loan, which will provide much-needed aid to struggling business owners.
With the new qualifying standards for the Paycheck Protection Program, business owners do need to prove that their business has experienced a 25% revenue drop for at least one quarter in 2020 compared to the same quarter in 2019. This “drop in revenue” is calculated based on gross receipts before expenses (aka, every dime your business made during the quarter in question).
Important Note: If you were not in business during the second or third quarter of 2019, you can compare any 2020 quarter to the fourth quarter of 2019. If you were not in business at all in 2019, you can compare the second, third or fourth quarter of 2020 to the first quarter in 2020. You need to have been in business by February 15, 2020 to qualify for any PPP loan.
No. According to the IRS, an employer cannot receive a PPP loan and claim Employee Retention Credit. Therefore, recipients of the Employee Retention Credit may not be eligible for the second round of PPP loans.
Talk to a Credibly Lending Partner about alternate loan options today.
A number of banks, credit unions and other lenders will be issuing PPP loans through the new program, but lenders who offered loans during the first round of funding may not be offering loans again. Credibly is partnering with a lender to provide PPP loans to small businesses.
Connect with a Credibly lending partner to learn more about your PPP loan options.
If you’re unsure whether you qualify for a PPP loan our portal can help. Fill out our online prequalification form and if you don’t qualify for everything you need, we have funding solutions that can help stabilize your cash flow.
Subject to approval.
*Loan forgiveness is subject to providing follow-up supporting documentation for use of funds. At least 75% must be used for payroll during 8 week period after funding.
Certain products may not be available in all states.
Certain business loan products are made available through Retail Capital LLC, a licensed California Finance Lender.
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