Once again, there’s much-needed relief available for small business owners impacted by the coronavirus pandemic. The new round of Paycheck Protection Program (PPP) loans launched on January 11, 2021 and applications are now open. Although the program is scheduled through May 2021, it’s suggested that business owners apply ASAP before funding runs out.
Like the previous round of PPP funding, this new round is designed to help small business owners stay afloat or rebuild in 2021. The application process has been simplified this time around. However, be sure to check with your lender as the process may vary.
What has changed with this round of PPP funding?
$284 billion has been allocated to PPP and the program has been extended to May 31, 2021. Here are up-to-date details about this new round of funding for 2021.
- Available for businesses with under 300 employees
- Businesses eligible for PPP loans has been expanded
- Forgiveness for loans under $150K have a new, simplified one-page application
- Eligible expenses for forgiveness have been expanded (see below)
- Borrowers are allowed to choose a covered period that is any period of time between eight and 24 weeks
- A clarification has been made indicating that interest rates on PPP loans are non-compounding and non-adjustable
- A clarification has been made indicating that forgiven PPP loans are not taxable and forgiven expenses are tax-deductible
PPP use of funds
The allowable uses of funds for this program have been expanded to assist small businesses in covering even more of their unexpected costs as a result of the pandemic. PPP loans can be used to cover the following:
- Payroll costs
- Insurance benefits
- Employee salaries and/or commissions
- Rent payments and/or mortgage payments
- Software or cloud computing costs for business operations NEW
- Costs related to property damage and vandalism or looting due to public disturbances not covered by insurance or other compensation NEW
- Costs of the supply of goods that are essential to business operations NEW
- Covered worker protection expenditures that help adapt business activities to COVID safety requirements NEW
Documents to prepare for the PPP application
To ensure a smooth application process, have the following available before you begin:
- Payroll Summary Report supporting the 12 month average payroll calculation (Your payroll provider can help you crunch the numbers)
- If you have employees, 941 Forms for 4 quarters used in the payroll calculation
- If you are a sole proprietor or independent contractor, Annual Profit and Loss Report
- Tax Return for the most recent year
- 3 months Business Bank Statements
- A copy of your Driver’s License
- Name, Address, and SSN/EIN of any individuals or entities with 20% or greater ownership
- Quarterly Profit and Loss Statements for loans over $150,000.
How to apply for PPP loan forgiveness
You must apply for PPP loan forgiveness through your PPP lender as forgiveness is not automatic.
When your covered period has ended and/or you’ve finished using your loan proceeds, contact your lender to begin the forgiveness process.
While each lender may have different forgiveness processes, these are based on the SBA’s guidance and should include the following:
- A completed copy of the official PPP loan forgiveness application, also known as SBA Form 3508. Some business owners may use SBA Form 3508EZ or SBA Form 3508S, which require less paperwork and fewer calculations.
- Corroborating payroll documents, which may include bank accounts or third-party payroll service reports; tax forms; and payment receipts, canceled checks, or account statements as proof of employer contributions to employee health insurance and retirement plans. Note that your payroll provider may be able to help you produce this report: Paycheck Protection Program Loan Payroll Calculation: Your Payroll Processor Can Help
- Corroborating headcount documentation, such as payroll tax filings (typically Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings.
- Proof of business rent or lease payments, business utility payments, and/or business mortgage interest payments.
Can I apply for a 2nd round PPP loan if I received a previous PPP loan?
There are many, many, questions from small business owners across America about how the latest relief bill will impact their need for funding. Forgiveness was the big concern of 2021 but a new question has arisen: Can I get a second PPP loan if requirements are met?
The answer is YES, with a few caveats.
New loans are capped at $2 million, compared to $10 million before. Applicants must have no more than 300 employees, instead of up to 500 must demonstrate at least a 25% percent drop in revenues in any quarter in 2020 compared to the same period in 2019. Restaurants and other hospitality businesses, can have no more than 300 employees in one location.
Where can I apply for a PPP loan?
Let SmartBiz help you apply for a PPP loan. SmartBiz works with small business owners like you every day to help you apply for the funding you need. Since 2013, we’ve specialized in SBA (Small Business Administration) loans. The new round of the Paycheck Protection Program provides continued financial support to help eligible small businesses keep their employees and stay open safely during the COVID-19 pandemic.
How to apply for a Paycheck Protection Program (PPP) Loan
Our streamlined PPP Loan application can help you fill out your application, upload required documents, and submit them to the bank quickly, whether this is your first or second PPP loan. Details include:
- Loans available up to $2,000,000
- 1.00% interest rate and no payments for the first 10 months
- No collateral or guarantee required
The SmartBiz Small Business Blog was created to share important information that impacts small businesses across America. In addition to extensive content on small business funding, SmartBiz blog posts cover marketing, credit scores, sales strategies, hiring, insurance, employee management, and more.
Here are recent articles with additional information about the Paycheck Protection Program.
- Paycheck Protection Program 2021 Guide
- Documentation to Apply for a PPP Loan
- Expanded Use of Funds for the 2021 Round of the PPP Program
- PPP And EIDL Loan Advances And Changes Under New Act
- How To Get a 2nd PPP loan
- New Paycheck Protection Program Loan Forgiveness and Repayment Rules
*The availability of PPP loans remains subject to SBA guidance and other factors, including the amount of funding available to banks and the quantity of eligible applicants considered on a first-come, first-served basis. The information provided above is for educational purposes only. Please consult the SBA’s website for actual rules and the most current guidance.