The Small Business Administration opened up the latest round of the Paycheck Protection Program (PPP) loans earlier this week, only taking applications from community financial institutions. But next Tuesday, the program will open up to all lenders.
This pot of PPP money, approved in the latest coronavirus relief package, comes with some changes, including an adjustment to the maximum amount of money a business can qualify for.
According to the SBA, the maximum loan amount of a second draw PPP loan is 2.5 times average monthly 2019, or 2020 payroll costs up to $2 million. This is down from the maximum $10 million businesses could get the first time around.
“You also need to show that you saw a 25% drop in revenue from 2019,” Anna Serio said. Serio is a certified commercial loan officer and a senior writer at Finder.com.
She says small businesses hit the hardest by the pandemic can qualify for another round of PPP, but must prove a reduction in revenue and have no more than 300 employees.
“Any type of software that you need to use to keep your business up and running, supplier costs are now eligible,” Serio said.
Eligible expenses can now include operational expenses, human resource software, suppliers’ contracts for things like perishable goods, personal protective equipment, and costs related to riots that weren’t covered by insurance.
Another change: borrowers in the accommodation and food services sector can receive a maximum loan amount for 3.5 times average monthly 2019, or 2020 payroll costs.
This could have a big impact on restaurants in South Florida.
“Mom and pop, family businesses where their patrons come and dine, have all suffered far more than 25%, so it is available and it should be taken advantage of,” said Steven Klein, a certified public accountant.
Like in previous rounds, the loan is forgivable if 60% of it is used for payroll and 40% of the loan is used for eligible non-payroll expenses.