The U.S. Small Business Administration has launched the third wave of its Paycheck Protection program (PPP) forgivable-loan initiative. Open to both first time PPP borrowers and to some qualifying borrowers that received loans last year, different rules and different applications apply for “first-draw” and “second-draw” borrowers. Initiated last spring to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis, the program is administered through banks.
Second-draw applicants must prove that they had a 25 percent reduction in revenue to qualify. Borrowers must use 60 percent of their PPP loan proceeds for payroll purposes again this round. Some repeat borrowers can apply for 3.5 times their monthly payroll rather than just 2.5 times their monthly payroll. A few new eligible entities can now get PPP loans if they otherwise meet the qualifications, including chambers of commerce, destination marketing organizations, and some trade and news organizations. Interested parties should check with their lenders and accountants for specific details.
Previous borrowers and their accountants will be relieved that there is a new, simple, one-page forgiveness form for loans of $150,000 or less.
Locally, Happy State Bank President Ronda Bartlett gives credit to Vice President and Commercial-Loan Officer John Haley and his lending assistant, Amanda LeFever, for communicating with their PPP applicants and staying on top of an evolving program.
Last spring, Congress approved $349 billion in funding during the initial round for the PPP. An additional $310 billion was passed for a second round that was distributed in the summer. Congress approved a new relief package just before Christmas, including money for the third PPP round, and President Donald Trump signed it the following week.
The program which ran from April 3, 2020, through Aug. 8, 2020, faced intense criticism last spring as names of recipients became public. An Associated Press analysis showed restaurants slammed by the coronavirus pandemic received the most loans in the first round. They were followed by law firms and doctors’ practices. National chains, big car dealers funded by private-equity firms, country clubs, and other businesses with other access to capital also qualified.
FOR MORE INFORMATION
Visit www.sba.gov/ppp or for additional links see www.smallbusiness.com/pandemic/sba-ppp-2-resources.