What you need to know about the latest PPP loans

NOTE: This article has been updated with the final rules for the PPP loans released by the SBA after publication.

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Congress passed a $900 billion stimulus package just before the holidays that included $284 billion in Paycheck Protection Program loans for small businesses. While the basic framework of the program remains the same, lawmakers included new provisions aimed at fixing flaws in the program like money going to larger firms and adding clarity around tax implications. 

The SBA released final rules for the program on Jan. 7. Here's what you need to know:

• For the first two days after the program reopens, only applications from community financial institutions will be accepted. These organizations typically serve women, minority and underserved entrepreneurs.
• Applications for all business owners close on March 31.
• Businesses will calculate their maximum loan amount using payroll costs for a one-year period, using a date of their choosing that can be in either 2019 or 2020.
• The maximum loan amount has been substantially reduced from $10 million to $2 million.
• You can receive a second PPP loan if you have fewer than 300 employees and lost 25% of your gross receipts over one quarter in 2020 compared to the same quarter in the 2019. If you are taking out a loan under $150,000, you do not to provide documentation of this loss until you apply for forgiveness.
• You cannot apply for a second PPP loan if your application for the first round of loans is still unresolved.
• If this is your first time receiving a PPP loan, the initial requirements of having up to 500 employees and not demonstrating a loss in revenue apply, according to the Washington Post.
• In order to have the loan forgiven, businesses must spend 60% of the loan amount on payroll. The remaining 40% can still be spent on rent, mortgage payments, utility costs and other expenditures like purchasing personal protection equipment.
• Expenses paid for with the PPP loan are tax deductible. We're still waiting for additional details on the tax implications, so it’s unclear if there are exceptions or any limitations on the deductions.
• Just as before, business owners will apply for the loans through their bank or community financial institution. Applications are not yet open.

The latest stimulus package also included $15 billion set aside for grants for live-music venues and $20 billion to go toward the Emergency Injury Disaster Loan advance grants. Small business owners can once again apply for a grant of up to $10,000 and the deadline to apply for the program’s loans has been extended to Dec. 31, 2021. Applications have not opened for the grant but are expected to in the coming days.

Will you apply for this latest round of loans? How did your business fare over the holiday season?

Latest Developments

• Workers in 20 states and 32 cities will see an increase in their wages after the areas enacted higher minimum wages. The federal minimum wage remains at $7.25 — a limit set in 2009 — but workers are beginning to see up to $15 an hour in states enacting higher wages.
• Joining other municipalities, British Columbia is capping delivery fees that third-parties can charge restaurants at 15%.
• Cities are once more shutting down, including outdoor dining, leaving restaurants and bars to rely solely on takeout. While delivery orders have reached an all-time high, new data shows restaurants’ revenue is continuing to decline. 
• California lawmakers have responded to concerns from restaurant owners that third-party apps like DoorDash have listed their eateries without permission, passing a law that requires the apps to have an explicit agreement with all establishments.
• A new variant of COVID-19 that experts believe originated in the UK is quickly spreading throughout the U.S., with cases confirmed in New York, Colorado, California and Florida.
• Small businesses are struggling to stay afloat, but the corporations that host them are bringing in record profits.

Conversations For You

• Just as the Great Recession jump-started a startup boom, so too will the pandemic create an entrepreneurial renaissance. New business applications saw a sharp increase over 2020 that is expected to continue this year. Here’s what new entrepreneurs and established business owners are saying.
• The $900 billion stimulus package passed over the holiday break is welcome news to small businesses. Owners share what the provisions mean for them and their firms.

Resources

• The University of Georgia is hosting free webinars for small businesses on how to apply for the latest round of PPP loans.
• Colorado business owners can apply for additional government aid if they have revenue under $2.5 million.

Something Good

• If you’re like me, you’re probably running out of things to watch in the evenings in an attempt to escape all the turmoil outside. I spent much of the last two weeks watching old and new shows and movies. Here’s my recommendations so you don’t have to keep endlessly scrolling: Bridgerton (don’t hate me), The Flight Attendant, Spotlight, Soul (favorite thing I’ve watched in a long time) and Schitt’s Creek, which really is funny as everyone says.