MoneyLife

SBA Issues Second Round of PPP Loans for Small Businesses

By Lindsey Ryan

A second draw of the Small Business Association Paycheck Protection Loans has been issued in early 2021. Under President Biden’s direction, the second PPP loan will open availability to small business owners who may not have qualified for the first draw of lending in 2020. 

If your small business has been affected by the coronavirus pandemic, you qualify for government lending options. The current cut-off date for applications is May 31st, 2021. Keep reading to see if you qualify, the loan terms and how to apply. 

Who qualifies for the second PPP loan?

To qualify for the second draw of PPP funding you must provide documentation that shows your business experienced a 25% or more decrease in sales in 2019 or 2020 and has less than 300 employees. Small business owners who received funding in the first draw are also able to reapply and receive PPP funding. 

How can PPP loans be used? 

Paycheck Protection Loans can be used to cover for payroll costs, employee and owner benefits. Funds can also be allocated to rent, mortgage interest, COVID-19 protections, utilities, as well as physical damages not covered by insurance due to vandalism or looting. 

CostUses 
Payroll costs Can be used to pay employees and the owner’s salary. 
Benefits Health insurance, paid leave, retirement plan matching, taxes paid by the employer. 
Rent & Mortgage Interest Business location rent and mortgage interest.
COVID-19 Protections Personal protection equipment (PPE) such as masks and face shields. Temporary dividers, sanitizing stations, modifications to the business location to mitigate COVID exposure. 
Utilities Water, gas and electricity used at the business location. 
Physical damage If your business was vandalized or looted during the years of 2020 or 2021 and there are costs beyond what your insurance policy covered, you can use PPP funds to fund repairs.

If you are able to receive a PPP loan, be sure to properly document how every penny of the funds has been used. Some lenders will even provide a customer portal to keep track of PPP loan funds. Without proper documentation, you might be liable for paying the loan back 1% interest. 

How to apply for a PPP loan 

Paycheck protection loans are offered by large banks, local branches and credit unions across the country. Every PPP loan issued will go through a very similar process in order to comply with government regulations at a maximum interest rate of 1%. 

In order to apply, you can visit the SBA’s Lender Match tool. With the Lender Match tool you will be asked questions about your business like the name, location and a short description on what your business does. From there the SBA will need to know the lending amount with the minimum loan amount being $500 and the maximum loan amount of $10 million. 

After filling out the short questionnaire, you will hear from lenders who are interested in your loan application within 2 days. You will have the opportunity to compare terms, lending platform and overall which lender you feel most comfortable with. 

Once you have decided which lender you prefer, you will have to formally apply for the loan. A huge benefit to PPP loans is that businesses that may have had trouble qualifying for funding in the past may now qualify due to some restrictions being lifted. 

Are there other government lending programs available now?

Entering into the country’s second year of the coronavirus pandemic many private companies and the US government has stepped up to create lending platforms and grants for small businesses to survive. If your business does not meet the requirements for the second draw of the Paycheck Protection Loans, there are a couple more programs that could help during this time. 

Shuttered Venues Operators Grant

This grant is for businesses that have not been able to operate at all during the COVID-19 pandemic. In some states, businesses like concert venues, theaters, talent agencies, zoos, aquariums and museums have been closed until further notice because of social distancing laws. This grant can help these venues from permanently closing.

In order to qualify a business must have been operational on February 29, 2020, and has lost significant income due to the pandemic. 

Applications will become available in early April 2021 and businesses that have been most affected will receive grants first. There are 3 priority tiers and a supplemental grant available with the Shuttered Venue Operators Act. Tier 1 will be the first to receive grants and must have lost 90% or most of the business’s income to qualify. After 14 days, Tier 2 applicants may receive funding, followed by Tier 3 and finally if funds are available supplemental funding may be dispersed to businesses who applied for this grant. 

Much like the PPP Loan, to apply for Shuttered Venues Operators Act a business must have thorough documentation of the business lost during the pandemic and what they plan to use the funds for. Currently, a business can apply for grants up to 45% of their 2019 gross earned revenue up to $10 million dollars – whichever is less. 

To get the full details on when and how to apply for the Shuttered Business Operators Grant, use the links below. 

COVID-19 Economic Injury Disaster Loan (EIDL & EIDL Advance)

This loan is designated for small businesses, agricultural businesses and nonprofits throughout the United States, the District of Columbia and US territories. To qualify, your business must have experienced economic hardship because of the pandemic. You can currently apply for an EIDL loan with a maximum loan amount of $500,000. This difference between an EIDL and a PPP loan is that the EIDL is not eligible for forgiveness, but instead has very low fixed interest rates, a 30-year repayment term and no prepayment penalties. 

If you feel your business needs additional funding you can learn how to apply for an EIDL Loan here.  

You may have also heard of an EIDL Advance loan that was focused on lower-income communities and did not have to be repaid. Unfortunately, the EIDL Advance loan funds have been fully dispersed and applications are currently closed.

Get the funding your small business needs today

The Small Business Association (SBA) was formed in 1953, but many businesses may not have known how much help they could provide to their business until the pandemic. Luckily, the SBA has acted quickly on getting funding to businesses in need over the past year. 

If your business could use capital to keep your doors open, one or more of the above loans could help you through these unprecedented times. 

Use the following links to stay up to date on when you can apply and specific qualifying attributes for each type of loan. 

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