Many companies eligible despite new restriction requiring 25% revenue loss compared to last year

Beginning January 11, 2021, struggling small businesses are eligible to apply for a new, potentially forgivable federal loan.

The Paycheck Protection Program (PPP) re-opened, but was initially only available to businesses applying at Community Development Financial Institutions (Community Institutions), which are banks and lenders that provide funding to small businesses in underserved communities. Such businesses had a difficult time attaining loans during the previous rounds of PPP lending.

To rectify this, the Small Business Association (SBA) set up a staggered rollout of PPP lending.

For the first two days, only first-time borrowers were able to apply for loans at Community Institutions.

On the third day, second-time borrowers could begin applying for loans at Community Institutions.

The US Treasury and the SBA said that larger lenders would be able to begin making loans sometime after January 13, but had not set an exact date. However, it was expected to happen during the third week of January.

The loan is available to businesses that received a PPP loan when the program first went into effect as long as they are not a public company, employ 300 people or fewer, have used or will fully use their first PPP loan and can show a 25% or greater drop in gross receipts for any quarter of 2020 compared to the same quarter in 2019.

L ionel Marlow holds the keys to the service tech castle. He has been in the industry for more than 40 years and is still having the time of his life. He has made his living in this industry and has loved every minute. See story on page 11. Borrowers can receive up to 2.5 times their average monthly payroll costs calculated using either the 12 months prior to the loan, the calendar year 2019 or the calendar year 2020. Seasonal businesses calculate their average total monthly payroll for any 12-week period between February 15, 2019, and February 15, 2020.

Meanwhile, hotels, restaurants and other accommodation and food service businesses may borrow up to 3.5 times their average monthly payroll costs.

Thesefundsareforgivableprovidedthey are spent on specific costs which include:

• Payroll costs, including paid sick leave and group insurance benefits

• Operating costs such as mortgage, rent, utilities, software and human resources and accounting

• Property damage sustained during 2020 protests

• Personal protective equipment to meet health and safety requirements

• Payments to a supplier covering contracts and purchase orders in effect before taking out the loan Interested borrowers will need to submit documents verifying payroll costs and revenue loss such as tax forms or bank statements. Some of this paperwork may be avoided by using the same lender that was used for the first draw loan.

For those seeking $150,000 or less, revenue loss needn’t be proven during the application process. However, such businesses must prove revenue loss when they apply for loan forgiveness.

For full loan forgiveness, at least 60% of the total loan must be used on payroll expenses within 8 to 24 weeks of receiving the loan, the timeframe of which is determined in the application process.

Business owners who borrowed $150,000 or less can submit a one-page document that details the following for loan forgiveness:

• The number of employees retained as a result of the loan

• An estimate of the amount that was spent on payroll costs

• The total loan amount

• Proof of qualifying revenue loss Borrowers of more than $150,000 will need to provide documentation of how the money was spent on:

• Payroll expenses and head count

• Operating costs

• Supplier costs

• Other covered expenses such as costs incurred for personal protective equipment or health measures taken A total of $284 billion has been set aside for the current Payroll Protection Program, compared to $350 billion set aside in March 2020, which was replenished with an additional $310 billion in April after an overwhelming crush of applications dried coffers in just two weeks.

These forgiven PPP loans can be claimed as normal tax deductions for business expenses. This new round of the PPP loans will be open through March 31, 2021.