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The Race for PPP

I was late for a race once, well, almost. Technically I was and should have been, but I got lucky because the race started late. I signed up for a 10k to test my fitness as I began marathon training, so I was already out of my comfort zone. It seemed nothing went according to plan this weekend. Packet pick up was confusing, I had to register on site, our hotel was 10 miles from the start when I expected it was just one. Come race day, I woke up 15 minutes before start time. At this point, all “plans” were out the window. We rushed the 10 miles to the start only to be detoured by roadblocks, the ones that would protect the racecourse. As we arrived at the start I jumped out of our vehicle as we came to an almost complete stop. My race had already started as I sprinted through a parking lot towards the big banner “Start/Finish”. Running frantically towards the corral, now 4 minutes after start time, I saw a mob of people moving forwards as the director announces, “runners please move forward to the starting line.” Confused I questioned, is this my race? I asked the first person I saw, “Is this the 10k!?” She smiled replying, “Yes, you’re fine, the marathon started late, and these are the 10k runners.” I returned a smile, relieved, a big deep breath, and then focus, because now it’s go time. 

Small business owners can finally catch their own breath after a stressful sprint to receive Paycheck Protection Program (PPP) support. The government backed program reached its limit of $349 billion of funding in just two weeks. Now, the PPP loan initiative is being amended to provide an additional $310 billion to replenish the program for applicants who were late to the game earlier this month. The program is designed to provide small businesses with funds to pay up to 8 weeks of payroll costs and benefits as well as interest on mortgage, rent, and utilities. Loan amounts are roughly equal to 2.5 times monthly payroll costs from the prior 12 months and if the funds are used properly, can qualify for loan forgiveness. Ideally, this provides a cash influx to help small businesses survive the COVID-19 crisis.

An estimated 15 million small businesses applied for PPP loans and just over 1.6 million were approved but those who didn’t get approval in wave one are getting a second chance. While the replenished funds will certainly be helpful for those impacted by the pandemic, this round of funding is expected to go even faster than the first.

How do you know if you can apply?  All businesses (including nonprofits), sole proprietors, self-employed, independent contractors, Tribal businesses, with 500 or less employees can apply. Businesses with more than 500 employees in certain industries may meet applicable SBA standards. 

What can you use the loan for?  Payroll costs and benefits, interest on mortgages, rent, and utilities

What counts as payroll costs?  Salary, wages, commissions, or tips up to $100,000 for each employee

How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.

Banks say they are ready when the next gun goes off as many report they have thousands of applications they weren’t able to get approved for prior funding. So, if you’re one of those small business owners or self-employed people, the time to act is now. 

  • Talk with your banker
  • Have your loan application completed now
    • This should be ready to submit when applications open
  • Figure your payroll report (this is what your loan amount is based on)
  • Gather 941s

If you’ve found yourself in this race to receive PPP funding, you’re not alone. Stay in communication with your lender and be proactive. This process will move so fast that you can’t afford to be late. After that, the marathoning of the business will resume. Please let me know if you have question about how you or your business might benefit from this SBA program or any others.