Covered Period For Round 3 Ppp
Round 1 and Round 2 PPP loans stipulated that the time during which you had to use your loan proceeds would be an eight-week period beginning on the date you received your loan proceeds. That was later expanded to 24 weeks.
Round 3 allowed you to choose any length period between eight weeks and 24 weeks, giving you more control over how to handle reductions in your workforce, if needed, once PPP funds are depleted.
What Are The Major Changes To The Ppp Loans
As with PPP1 loans, PPP2 loans give qualified businesses a loan of up to 2.5 times their average monthly payroll costs, either determined by the calendar year in 2019, 2020, or by the 12 months prior to the date the application is submitted. Hospitality or food service businesses with a NAICS code beginning in 72 may receive up to 3.5 times their average monthly payroll costs.
However, one of the biggest changes is the maximum loan amount, which is down from $10 million in 2020 to $2 million for second-time loan recipients. Congress has also updated other aspects of the PPP, including the following:
Cleaning Up In The Coronavirus Economy
Goodway Technologies, which is based in Stanford, Connecticut, makes and sells industrial cleaning tools, including a machine that sprays alcohol-infused disinfectant mist to sanitize surfaces. These days, that’s a pretty good business to be in.
Timothy Kane, CEO of Goodway, told Reuters earlier this month that his phone has been ringing off the hook. “Our orders jumped 50-fold in April, it was like a switch got flipped,” Kane said.
Goodway got a PPP loan that same month. On April 15, the company received between $1 million to $2 million from the program, according to SBA records.
Kane told CBS MoneyWatch the company’s core business of manufacturing parts for commercial heating and cooling systems has suffered during the pandemic. Goodway’s overall sales are now flat for the year, but only after dropping steeply in March before sprayer sales took off, he said.
When the sprayer orders first surged, Kane said, he didn’t have the manufacturing capacity to keep up with demand. The PPP loan helped him transition his business and retrain employees.
Kane said his company would likely have laid off workers in order to weather the transition in its business. He also said he applied for a bank loan without the help of the government and was rejected.
“Goodway is an example of what the Paycheck Protection Program was good for,” Kane said. “It saved jobs.”
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Applications Could Be Available Until The Last Minute
Prior to the deadline extension, many PPP lenders had already closed applications well before the March 31st deadline during the current round of funding. Thats because the SBA only had until March 31st to process applications.
But that might not be the case this time around. The PPP Extension Act of 2021 also gives the Small Business Administration until June 30th to process applications, meaning that they could be open until the May 31st deadline.
Expanded Coverage For Loans
Under the original Paycheck Protection Program, business owners could get their loans partially or fully forgiven if they spent their funds on payroll costs, utilities, rent, and mortgage interest payments.
With PPP2 loans, there will be expanded coverage for expenditures beyond payroll, utilities, rent, and mortgage interest, making it easier to obtain partial or full loan forgiveness. Theres also one notable change to payroll costs, which is the addition of employer-provided group insurance benefits, including group life, disability, vision, or dental insurance.
Here are the new areas you can allocate PPP loan funds to:
- Operations Expenditures: Software installments or upgrades, cloud computing, or other human resource or accounting needs.
- Property Damage Costs: Costs related to property damage from any public disturbances that occurred in 2020.
- Supplier costs: Any expenditures to a supplier related to a contract, purchase order, or order for goods that are essential to your businesss operations at the time the expenditure is made.
- Worker Protection: Personal protective equipment and other costs related to complying with federal health and safety guidelines or state or local guidance related to COVID-19, such as glass sneeze guards or high-efficiency air filters.
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As Cases Surge And Shutdowns Linger Cannes Lions Plans An In
The Cannes Lions International Festival of Creativity, typically a rosé-drenched networking extravaganza and one of the biggest events on the advertising industrys calendar, confirmed on Wednesday that it planned to go ahead with an in-person event this summer, even as Covid-19 cases surge around the world.
The availability of multiple vaccines offers hope that we can be together in June, even if we need to limit the numbers of delegates who can safely attend, Philip Thomas, the festivals chairman, said in a statement. Its clear from talking to the global industry that everybody is very keen to come together again.
The festival is scheduled to take place June 21-25 on the French Riviera.
As the coronavirus mutates, countries have scrambled to respond with new lockdowns, quarantines and border closures. Passengers flying to the United States will need to show proof of a negative coronavirus test starting on Jan. 26.
One branding executive described the Cannes news, which was first reported by AdWeek, as a bullish, optimistic event announcement that sits at odds with the slow vaccine rollout and rising Covid-19 numbers.
Required Certifications For Ppp Loans
Businesses were required to certify that the pandemic-related economic uncertainty made the loan request necessary to support ongoing operations and that funds were to be used as required, including no more than 40% for non-payroll costs. This requirement applied to both first- and second-draw PPP loans.
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If You’re Applying For A First Time Loan
If you were rejected in the first round or didn’t receive funds, you have a chance to apply again for an initial PPP loan. This time, loans are capped at $2 million as opposed to $10 million previously, but businesses with up to 500 employees are still eligible.
Many small businesses and self-employed individuals were disappointed in the first go of PPP because they didn’t have their books in order, Gorman said. This time, the new bill is much more comprehensive about what is needed, she said.
That means businesses and the self-employed should have their tax return materials on file, payments for rent and utilities as well as payroll information and employment records.
“I can’t emphasize enough the need to work with your tax professional on this,” Gorman said. “This is not an easy process, and tax professionals have really gotten to be very well-versed in PPP over the last eight or nine months.”
In addition, if you were rejected the first time, go back to the lender where you applied and see what prevented you from getting approved, Gorman said. That can help you shore up your application for the second round.
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Second Ppp Draw Maximum Loan Amount
The maximum loan amount is smaller for second-draw loans. In general, borrowers can apply for the lesser of:
- Maximum loan size of $2 million , or
- 2.5 times the average total monthly payroll costs during either calendar year 2019 calendar year 2020 or the one-year period before the date the loan is made.
- Tailored calculations and considerations are provided for certain borrower groups :
- NAICS code 72 entities may receive up to 3.5 times their average monthly payroll figure
- Borrowers that did not exist during the one-year period preceding Feb. 15, 2020
- Filers of Form 1040, Schedule C sole proprietors, independent contractors, and self-employed individuals
- Seasonal employers
- Farmers and ranchers
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Businesses Have Two More Months To Get Applications In For First And Second Draw Ppp Loans
Congress extended the application deadline for the Paycheck Protection Program to May 31st on Thursday when it passed The PPP Extension Act of 2021. Previously, the coronavirus assistance program for small businesses was set to expire on March 31st.
The PPP offers funding to small businesses based on monthly payroll costs, with the potential of up to 100% forgiveness depending on how it spends the funds. Heres what an extended deadline means for your small business.
Application Dates For A Round 3 Ppp Loan
As noted above, applications for Round 3 first draw PPP loans from approved community financial institutions started on Mon., Jan. 11, 2021. Second draw applications began on Wed., Jan. 13, followed by first- and second-draw loans from small lenders with less than $1 billion in assets on Fri., Jan. 15, 2021. All SBA 7 lenders were approved to accept first and second draw applications starting on Tues., Jan. 19, 2021.
Beware of scammers. Just as with the first two rounds, if you are a small business owner you can anticipate hearing from scammers promising to help you obtain a PPP loan. Only go through approved lenders or the SBA.
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Ppp Is Out Of Money Is The Ppp Loan Program Over Ppp Ran Out Of Funds
News sources are reporting that the PPP Loan Program is Out of Money and that the PPP program is over so banks are not accepting new PPP loan applications. We still have to wait for official SBA notice to see if the PPP programs are really out of funds.
DISCLAIMER This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Freedomtax Accounting and Multiservices Inc. is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. Freedomtax Accounting and Multiservices Inc. or its members cannot be held liable for any use or misuse of this content.
An article in the New York Times published 5/4/21 reads as follows:
The Paycheck Protection Program is out of money and closed to most new applications.
Four weeks before its scheduled end, the federal governments signature aid effort for small businesses ravaged by the pandemic the Paycheck Protection Program ran out of funding on Tuesday afternoon and stopped accepting most new applications.
Congress allocated $292 billion to fund the programs most recent round of loans. Nearly all of that money has now been exhausted, the Small Business Administration, which runs the program, told lenders and their trade groups on Tuesday.
Why The Ppp Closed Early
The PPP was a form of financial aid provided to businesses that were forced to close their doors and furlough workers due to restrictions amid the COVID-19 pandemic. The PPP was included as a part of the CARES Act originally signed into law in March 2020.
The PPP quickly ran out of funds for both the First Draw and Second Draw. The first round of PPP loan funds was exhausted quickly . When applications opened again this spring, the funds ran out faster than expected as well, with huge numbers of small businesses struggling.
In February 2021, the Biden administration implemented a 14-day exclusivity period for businesses of 20 or fewer employees to apply. The administration hoped to avoid so many businesses being left out of funding.
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Update: Sba Launches Ppp Loan Forgiveness Portal
The SBA Loan Forgiveness Portal was launched on Aug 24, 2021 to streamline the loan forgiveness process. Eligible borrowers with loans less than $150,000 can request forgiveness directly from the SBA. Prior to the Loan Forgiveness Portal, borrowers would have to submit documentation to lenders, but many lenders have already opted out of the new portal process including Bank of America, JBPMorgan Chase, and PNC.
Second Draw Ppp Loans
If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021.
- You have used up your first PPP loan
- Your business was operational before February 15, 2020
- Your business is still open and operational
- You have no more than 300 employees
- If your business has multiple locations, you have no more than 300 employees per location
- You can show a 25% or greater reduction in gross revenue
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Changes To The Ppp Program Announced By The Biden Administration
The Whitehouse announced, Feb. 22, 2021, five changes to the Paycheck Protection Program, one with a set term of two weeks, the other four effective until at least the end of March 2021. These changes were designed to make PPP funds available to very small businesses and others who had been inadequately helped by the program, according to the Biden administration.
- Beginning Wed., Feb. 24, 2021 through Tue. March 9, 2021, businesses with fewer than 20 employees were permitted to apply for PPP funding.
- The formula used to calculate PPP loans was revised to provide more funding for sole proprietors, independent contractors, and self-employed individuals. An additional $1 billion was allocated for these individuals in low-and moderate-income areas.
- Eligibility for PPP funding was extended to small business owners with non-fraud related felonies as long as the applicant was not incarcerated at the time of the application.
- Business owners with delinquent federal student loans were eligible for a PPP loan.
- Non-citizens who were lawful U.S. residents were also eligible and allowed to use their Individual Taxpayer Identification Numbers to apply.
What Is The Ppp Extension Act Of 2021
The PPP Extension Act of 2021 is a new piece of legislation passed by Congress and signed into law by President Biden that extended the deadline for PPP loan applications from March 31, 2021, to May 31, 2021. The program now officially runs through June 30, 2021.
Likewise, the bill notes that for the final 30 days of the program , the SBA is only permitted to process PPP loan applications submitted prior to June 1. It wont accept any new loan applications during this period. .
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More Second Draw Loans
Businesses that just received their first PPP loan might have time to apply for a Second Draw PPP loan. To get a second round of PPP funding, your business must have seen a 25% drop in revenue compared to 2019 and not have any more than 300 employees.
Your business must also fully spend the funds before you receive the Second Draw loan though you dont have to spend the funds before you apply.
Requesting An Increase In Your Previous Ppp Loan Amount
A request for an increase in your previous PPP loan amount is now available to some borrowers. It is open to businesses that did not take the full loan amount or returned a portion of their first loanâso long as they havenât already applied for forgiveness.
This allows businesses to receive the difference between their original loan offer and what they ended up taking.
For example, if a business was eligible for $20,000 but only took $15,000, they can apply to receive the $5,000 they previously opted not to take.
The application process may vary from lender to lender. Check in with your original PPP loan lender for more information.
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Mistakenly Overpaid In Ppp Loans During The Pandemic Look Out Small Businesses The Government Will Be Coming For Its Money
The Paycheck Protection Program ended on May 31st, but borrowers should not be too quick to put the program in the rear view mirror. Despite its popularity, the program may soon come back to haunt even the earliest of recipients as loans are re-reviewed for overfunding.
PPP overfunding occurs anywhere a good faith error results in a borrower receiving more than he or she is qualified to have forgiven. Such errors could be due to anything from a typo in an excel sheet to a misunderstanding of the qualified expenses. If that happens, the difference must be paid back, unless its under $10. Yet, calling it a good faith error or a typo doesnt quite capture the magnitude of an error that might mean a small business owes $10,000 on what was understood to be a forgivable loan in a crisis.
A similar overfunding issue occurred with the Pandemic Unemployment Assistance program when recipients were informed that the PUA mistakenly approved them for more than what they were qualified to receive, and that the difference would need to be paid back in full. Across the country, people were confronted by notices to pay upward of $20,000 during their most desperate days.
Are these programs truly not accountable for the funds they mistakenly approve? Its a difficult question especially since the pandemic response has been one in which policymakers have acted as quickly as possible and hammered out the details later.
The Federal Government Ran Another Record Deficit In December
The federal budget deficit was larger last month than in any December in American history, the Treasury Department reported Wednesday, another in a string of record-setting deficits that are a result of the pandemic and the governments efforts to mitigate its damage to the economy.
The monthly deficit in December $140 billion was more than 10 times the size of the deficit the government ran in the same month a year earlier, and it broke a record set in the 2009 recession. The first three months of the fiscal year 2021, which began in October, have seen the nation run a deficit of nearly $600 billion in total also a record, Treasury officials said. The fiscal year 2020 deficit was a record-smashing $3.1 trillion.
Lawmakers responded to the pandemic-induced recession with trillions of dollars in government spending, including direct aid to individuals and businesses, tax cuts for corporations and increased spending on health efforts to combat the spread of the virus. Late last month, Congress approved an additional $900 billion economic aid package. But little of that money was flowing into the economy by years end, Treasury officials said, so it did not materially affect Decembers deficit numbers.
The developer behind Flo, a period- and fertility-tracking app used by more than 100 million women, on Wednesday settled federal charges that it had misled users about its data-handling practices by sharing their intimate health details with Facebook and Google.
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