He said the U.S. Treasury and Small Business Administration will soon open the program to all small businesses. Although not yet the exact date, the Consumer Bankers Association said it expects it to happen occasionally in the week of January 18th.
The latest Govt relief package, signed into law at the end of December, covers $ 4,284 billion to provide additional credit to eligible businesses, including those already borrowed months ago.
Here are six ways the program changed to this latest round:
Businesses can now get a second PPP loan. Businesses that received PPP credit when the scheme first came into effect may apply for a “second balance” that does not employ more than 300 people, not just one public company, with the first PPP loan for utilized or fully utilized authorized applications, and the first, second or third quarter of this year compared to the same quarter of 2019. It could show at least a 25% drop in total revenue in the third quarter.
Target funding is provided to the most vulnerable businesses. Specific amounts – between $ 15 billion and $ 25 billion – are earmarked for community development finance companies – which typically lend to businesses owned by minorities in small communities – and businesses with fewer than 10 employees and low-income areas.
Restaurants can get big loans. Most qualified businesses, as before, can borrow up to 2.5 times their average monthly wage costs. But restaurants and lodging businesses can now apply for loans equivalent to 3.5 times their monthly payroll.
However, any debt should not exceed $ 2 million, which is less than the previous cap of $ 10 million.
There is more flexibility in how the loan can be used and more fully forgiven. For any PPP loan to be fully forgiven, at least 60% of the money must be used for payroll expenses. But the remaining 40% or less can be used to cover a wider range of business expenses than in the initial rounds of PPP lending.
Beyond mortgage interest, rent and utility payments, the loan can now be used to cover personal security equipment and other costs incurred to meet Covit regulations, as well as certain operations, property damage and supplier costs.
The apology process is easy. For a PPP loan to be forgiven, businesses that have borrowed 000 150,000 or less must submit a one-page certificate, which includes the number of employees retained by the business as a result of the loan, and the amount of the loan? Expended on payroll and total loan amount. Borrowers must certify that the information is accurate and that they comply with the loan requirements.
This should help many small businesses that have received PPP loans during previous credit rounds. According to the Small Business Administration, 87% of loans were less than $ 150,000.
The tax breach for PPP borrowers is now huge. If the loans are used for authorized purposes for the recipients they will be tax deductible, the latest Govt relief package further sweetened the pot.
Businesses generally deduct their payroll and operating expenses from their gross income. Now, even though those costs are often paid off by a tax-free loan, they are still exempt.