Congress has passed and the President has signed a second round of stimulus relief that will provide additional funding to the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). Like the first round, many banks are warning that the new funds are expected to be quickly depleted.
If you have not already applied for PPP and would like to take advantage of the program, don’t delay! If you are not familiar with the program, PPP provides loans to small businesses, non-profit organizations, sole proprietorships, and independent contractors. The loans are intended to cover the costs of payroll, rent or mortgage, and utilities and are capped at either 2.5 times the average monthly payroll cost from 2019 or $10 million. Employees who retain employees during a specified eight-week period may be eligible for loan forgiveness as long as the funds are utilized for the indicated expenses
NOTE: the regulations on the loan forgiveness have not yet been published, so there are no guarantees that your business will be eligible. It is important to document and carefully account for the use of these funds to ensure that you retain your rights to any potential loan forgiveness.
PPP applications can only be submitted once. If you have already submitted an application to your bank, contact them to make sure they still have your application and request that it be submitted to the U.S. Small Business Administration (SBA) as soon as additional funds become available. Applications will be accepted again beginning Monday, April 27. Loans will be approved on a first come, first-served basis, so act quickly.
The latest legislation will also reopen applications for Economic Injury Disaster Loans (EIDL), which have been temporarily suspended awaiting Congressional approval. Business owners who are ineligible for PPP may want to consider this program instead. The EIDL option includes a possible advance sum of $10,000 that can be accepted and forgiven, even if the EIDL application is not accepted.
For more information on SBA resources and updates, visit SBA.gov.
If you have additional questions or need assistance in applying for either of these programs, please contact us. We are here to help.