Paycheck Protection Program
The first round of $359 billion in funding for the Paycheck Protection Program quickly depleted; however, the second round arrived with some additional safeguards in place for small businesses.
While the bill itself did not include any changes (maintaining the same structure and requirements), there are two significant changes to note in round two of the “Paycheck Protection Program and Health Care Enhancement Act.”
First, at least $60 billion of the newly allocated $310 billion in funds must be granted by smaller lenders to accommodate actual small businesses.
Second, you can return the funds within two weeks with no penalty if you find you do not need it.
This means funding is truly for small business owners like you.
Where and How to Apply
In order to ensure the dedicated $60 billion goes to approving loans for small businesses, the funds are going directly to credit unions, community financial institutions, and small banks.
If you are concerned with re-submitting an application for round two, there is no need to re-apply if you have not heard anything back from your lender. There is, however, no penalty for applying more than once with multiple lenders. The lender which processes your application first will be the one who carries-out your loan.
You can access a list of SBA-approved lenders here.
It should be noted: at the time of this writing, there is more than $120 billion in funds still left unallocated for small businesses.
Economic Injury Disaster Loan Program
Additionally, the new bill also provides $60 billion for the EIDL program, administered by the U.S. Small Business Administration, which exhausted its first allotment in just 14 days.
At this point in time, the EIDL program is now only accepting applications for agricultural businesses due to limitations in funding and availability.
More details on those requirements and applications can be found here.
Ensuring Things Go Smoothly
Once approved for a PPP loan, you are now looking at an eight-week timeline to facilitate this process both within your business and in obtaining loan forgiveness.
There are a few key steps which should be taken to achieve this:
Communicating with Employees
Contact the employees you had to put on furlough or laid off, letting them know you can put them back on payroll and provide a stable income for at least eight weeks. Keeping as many employees as possible on full payroll will assist you in being eligible for loan forgiveness.
Ensure your employees are no longer collecting unemployment benefits as the PPP disqualifies employees from being eligible.
Utilize this time to set your business up for success post-coronavirus.
Create a Separate Bank Account
In order to achieve loan forgiveness, you must be careful you are spending the PPP funds on the right things (see last month’s blog post here). By creating a separate business bank account to hold your PPP funds, this will make tracking your expenses much easier.
One thing to keep in mind is not all expenses are done via debit card. If you use cash, credit cards, online platforms, or other payment methods, you will want a proper bookkeeping and recordkeeping setup.
Maintain Records and Bookkeeping
Once again, proving to your lender your expenses line up with PPP guidelines is essential. You will need to track and categorize each expense, keeping track of receipts, invoices, and official records of payment. Staying organized will expedite the processing of your claim and minimize rejection.
Apply for Forgiveness
When the time comes, and all of your records and booking are in order, you will process your loan forgiveness application with your lender.
File your 2019 Taxes
The tax filing deadline has been deferred to July 15, 2020. The sooner you file your return, the sooner you can get a refund (if you are owed one). If you applied for the PPP with unfiled tax forms, submit those to the IRS as soon as possible.