After months of waiting for much-needed relief, small businesses are finally getting renewed support from the federal government. The new stimulus package approved by Congress comprises $900 billion in virus relief funds, including $284.5 billion to reopen and strengthen the Paycheck Protection Program (PPP) for first time and second time borrowers. Please note that you can apply for either a first or second draw offering two and a half times your payroll and for self-employed people with no employees you can just use your 2019 Schedule C earnings.
With the changes, borrowers can now qualify for up to $10 million ($2 million for repeat borrowers).
How and When to Apply:
You can apply NOW through March 31, 2021! Applications are attached.
SBA is currently accepting First and Second Draw PPP loan applications from participating lenders. Applications will first become available through community financial institutions, a subset of banks and other lenders who meet special criteria, with larger financial institutions soon to follow. PPP loans carry an interest rate of 1% and can be fully forgiven—principal and interest—if spending requirements are met. Consult your bank to find out about their application Process.
The First-Time Borrowers & Second Draw Applications are both attached.
PPP Forgivable Loans are Available to First-Time Borrowers from the Following Groups:
1. Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
2. Sole proprietors
3. Independent contractors
4. Eligible self-employed individuals
5. Non-profits, including churches.
6. Accommodation and food services operations with fewer than 300 employees per physical location.
To receive a PPP second draw loan, eligible entities must:
1. Have previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses.
2. Employ no more than 300 employees (as opposed to 500 employees in the first round of PPP).
3. Demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same quarter in 2019.
For Assistance with Finding a Lender:
1. Divvy/Lendio have already begun accepting applications.
2. Lender Match
3. View all lenders near you on a MAP.
4. For BERKELEY Businesses, check with Berkeley OED.
Additionally, you can also see the 82-page interim final rules (IFRs) for first-time borrowers or the 42-page IFR guidelines for businesses that previously received a PPP loan issued this week by the U.S. Small Business Administration (SBA) and Treasury. All Second Draw PPP Loans will have the same terms regardless of lender or borrower.
There are limitations on the amount of money a business can borrow under the program. The specific amount each business is eligible for is calculated based on its payroll expenses, with food and hospitality businesses qualifying for additional funds, but the maximum loan amount for first-time borrowers is set at $10 million.
Just like during the first rendition of the program, 60% of the loan amount must go toward payroll. But this time around, the categories of eligible expenses for the remaining 40% have been expanded to include worker protections such as personal protective equipment, damages from looting or vandalism that took place in 2020, and professional services like cloud.