What You Need to Know About New Paycheck Protection Program (PPP)

After months of tense negotiations, Congress finally passed the new COVID-19 relief package that includes $900 billion in renewed aid for small businesses struggling to keep their companies afloat. President Donald Trump eventually signed this bill on 27th Dec that would provide a second stimulus payment.

This long-delayed stimulus package will be beneficial for Small businesses that are forced to adjust to stay-at-home and shutdown rules and adopt new ways to keep customers and employees safe.

So, do you want to leverage the benefits of this new COVID-19 relief package and understand what it contains? Well, we’re sharing everything you need to know about this economic relief legislation so you can understand what it can mean for your small business.

Second Round of PPP Loans:

After the success of the first Paycheck Protection Program whose deadline was Dec 31st, 2020, the government introduced another round of PPP loans that businesses can apply until March 31st, 2021. There are roughly $285 billion in PPP loans and just like the first round of PPP loans, these loans are also forgiven if you keep your employees on the payroll. Here’s everything you need to know about new PPP loans.

Who Can Qualify:

The requirements for taking out the new PPP loans are just the same as the first round, including the following:

• Should not have more than 300 employees
• Must use the full amount of the first PPP loan.
• Can show a drop of at least 25% in annual gross receipts
• Have temporarily closed or suspended operations

New PPP loans are available to small businesses, self-employed individuals, non-profits, small agricultural cooperatives, sole proprietors, independent contractors, housing cooperatives, trial businesses, and veterans’ organizations. These loans are 100% guaranteed by the federal government and don’t require any collateral.

How Much You Can Qualify:

The amount of loan you can receive under second round PPP loans is similar to that of old PPP loans. You can secure up to 2.5 times your average monthly payroll costs.

How You Can Use the Borrowed Amount:

• Payroll costs, including salary, wage, family, vacation, medical, sick leave or health benefits
• Operating costs, including payments for rent, bills, mortgage, utilities, and other day-to-day expenses.
• Supplier payments before taking out the new PPP loan
• Property damage sustained during a disturbance in 2020

All expenses that fall under those categories are eligible for forgiveness under the new PPP loan. Besides, you must use 60% of the loan amount for payroll if you want to qualify for full PPP loan forgiveness.

How to Prepare for New PPP Loans:

Because of the increased demand for PPP loans, it’s important to gather all the important documents for the loan right away. It’s significant to submit complete and accurate information so that you can easily apply and approve your loan application. Here are some valuable tips to prepare for these new COVID-19 relief funds.

• Upload accurate and complete documents as they are easy to process than scanned and incorrect ones. If you have multiple documents, it’s always a smart idea to upload them separately and consolidate them into a single file. No matter how long it takes, submitting your documents electronically is the best way to increase your applications’ processing time.

• Application must be in an owners’ name

• Double check your PPP loan application before submitting it to the lender. Since minor typos and errors can delay the approval process, please take the time to review your application. Check your application for the bank account information, Employer Identification Number, and your personal details such as date of birth, address, and SSN.

How to Apply for the New Paycheck Protection Program Loan?

Planning to apply for the new PPP loan program? Well, applying for this COVID-19 relief aid is not as difficult as it seems. You can apply through existing SBA 7(a) individual lenders such as banks, credit unions who have been offering SBA guaranteed loans as part of the program.

You may need to submit a wide variety of documents to apply for new PPP loan. However, what documents may be accepted depending on the lenders you’re working with. The most common documents that might be requested are:

• Basic business information such as name, tax id number and address
• Business start date
• Breakdown of payroll benefits
• Bank account and routing number
• A purpose for the loan
• Twelve-month profit and loss statement
• Payroll summary report with corresponding bank statements
• Most recent utility bills
• Payroll expense verification documents
• 1099s (if you are an independent contractor)
• Most recent mortgage or rent statement
• IRS forms 940 and 941
• Certification that all employees live within the United States

You can approach online alternative lenders who are also accepting the application for the second round Paycheck Protection Program loan, including many that are on Smansha Marketplace. We connect you with the nation’s top alternative lenders who will help you connect and seamlessly apply and get PPP loans through Smansha’s online funding marketplace.

PPP loans are not directly provided by the SBA but from individual lenders. These lenders review your PPP loan application and check all the essential documents to see if your business is eligible for the loan or if you can repay the borrowed amount.