The U.S. Small Business Administration (SBA) and Treasury issued guidance on January 6th for the new Paycheck Protection Program (PPP). The original program was put into place to offer forgivable loans to small businesses impacted by the coronavirus pandemic. Those funds ran out quickly and this new round offers basically the same program.
However, this time around, priority will be given to certain businesses including minority, underserved, veteran, and women-owned businesses. Here are details so you can apply for the PPP funding you need in 2021.
SmartBiz Loans is proud of the fact that over 50% of the SBA and term loans funded by our banks are for women-owned, minority, or veteran businesses. Let us help you apply today.
The first round of the PPP forgivable loans supported the employment of 51 million American workers and over 80 percent of small business payroll across all 50 states and territories.
More than 87 percent of loans have been for $150,000 or less. PPP loans have been distributed across diverse areas of the economy, with 27 percent of the funds going to low- and moderate-income communities, which is in proportion to their percentage of the population.
Building on the success of the earlier round of PPP, the SBA is continuing to address potential barriers to funding.
To address obstacles, there are new set-asides in place for certain business types seeking funding this time around including minority, underserved, veteran, and women-owned businesses. A set-aside is a program requiring a percentage of opportunities (as for jobs or funding) to be reserved for an underrepresented group.
Here are the numbers and guidelines you need to know to prepare you for the PPP application whether it’s your first or second PPP loan.
In May 2020, the U.S. Census Bureau released new estimates showing 1.1 million employer firms were owned by women and 1.0 million by minorities.
Additional statistics released include:
In 2017, the sector with the most women-owned businesses 16.9% (192,159) were in the health care and social assistance industry, followed by professional, scientific and technical services 16.4% (185,649), and 11.7% (132,894) in the retail trade industry.
The top sectors for Hispanic-owned firms were construction with 15.6% (50,187) of all firms, followed by accommodation and food services 13.0% (41,817), and professional, scientific and technical services 10.6% (34,292). Hispanic firms in these top three industries employed approximately 1.2 million workers, had receipts totaling approximately $130.9 billion and an annual payroll of approximately $35.8 billion.
There were 555,638 Asian-owned businesses, with 23.9% (132,698) in the accommodation and food services sector. Asian-owned firms had the largest receipts ($814.8 billion) among minority groups.
Black or African Americans owned 124,004 firms in 2017 with 32.0% (39,714) of these firms in the healthcare and social services industry.
The guidance included two Interim Final Rules (IFRs).
The 82-page IFR “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended” consolidates the rules for PPP forgivable loans for first-time borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.
The 42-page IFR “Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans” lays out the guidelines for new PPP loans to businesses that previously received a PPP loan.
In addition, the SBA released a three-page “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns.” It includes a commitment from the SBA to make at least the first two days of the PPP application window open exclusively to applications from community financial institutions that serve minority- and women-owned businesses. SBA began accepting applications for the second round of PPP Loans on January 13, 2021. The program is authorized through May 31, 2021.
The Economic Aid Act has provided set-asides for new and smaller borrowers, for borrowers in low- and moderate-income communities, and for community and smaller lenders. The set-asides include:
The SBA announced in its three-page guidance that it would take a number of steps to ensure increased access to the PPP for minority, underserved, veteran, and women-owned business concerns.
The SBA said it would:
Congress has expanded the types of expenses for which all PPP loans can be used, which applies to existing PPP loans, unless forgiveness has already been obtained, and new PPP loans.
Previous proceed use for first round of PPP:
Funding could be used for payroll, rent, covered mortgage interest and utilities.
New proceed use for the next round of PPP funding:
The PPP now allows proceeds to be used for:
Let SmartBiz help you apply for the new round of the Paycheck Protection Program (PPP). Review our list of documents to help you organize and prepare.
SmartBiz Loans® 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 PPP, to be administered by the SBA, makes continued financial support available to help eligible small businesses keep their employees and stay open safely during the COVID-19 pandemic.
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.