TRI-CITIES, Tenn. (WJHL) The goal of the federal Paycheck Protection Program is to keep small businesses staffed and open during these challenging times.
With the second COVID relief package passed by Congress in December, $284 billion was allotted to a second wave of PPP loans to be given to small businesses impacted greatly by the pandemic.
The U.S. Small Business Administration announced January 19, 2021 that in just the first week of the program’s reopening from Jan. 11-17, they approved around 60,000 loan applications. This amounts to 5 billion dollars already going to help businesses in need as the applications continue to pour in.
This comes as many local businesses are still reeling from shutdowns and subsequent loss in revenue for months.
“Some of the studies have shown that 60 percent of businesses that had to close down may not reopen,” said John Vandergriff of Blue Ridge Wealth Planners.
He added that the goal of the second round of PPP loans is to make sure small businesses are truly the ones benefitting, as opposed to the first round of assistance that was open to big companies as well.
“There were a lot of large, publicly traded companies that qualified for the benefits and were able to benefit from that. That wasn’t really the intention of what they passed the legislation for,” said Vandergriff.
The focus in this new legislation is on making sure those who need the money most are the ones who get it, which is why new criteria was put in place for business owners looking to apply.
“They have to demonstrate a quarterly revenue loss of 25 percent year over year, they have to have less than 300 employees, and the maximum cap would be 2 million dollars,” said Colin Barrett, President and CEO of the Tennessee Bankers Association.
This counts for businesses who received the first PPP loan in 2020 and now want the second, and also those who have not received one at all.
“The thing the government is ultimately looking for is documentation of where your business was before, how much it declined, and based on the decline you are eligible for X dollars,” said Vandergriff.
The loan is forgivable as long as it is used properly by businesses to stay open.
“It can be used for a variety of things including paying your employees and utilities. They have added some new things in the current round including HR and accounting, PPE and even any property damage that might have occurred in 2020,” said Barrett.
The Small Business Administration reports that of the first round of PPP loans in 2020, 5.2 million small businesses were helped, keeping 51 million Americans employed.
This second round of help aims to be even more streamlined.
“The good news is, the forgiveness of these loans is a lot simpler with the new legislation which will take a lot of the burden off of these small businesses and let them get back to serving their customers,” said Barrett.
The focus ultimately comes back to keeping small businesses, the backbone of so many American communities, successful for years to come.
“Big businesses really thrived through a lot of this especially if you were in a sector to benefit from online shopping or online experiences. You were able to have a much better 2020 than a lot of businesses locally, from the aspect of being forced to not have your doors open and trying to make ends meet and pivot in a time where everybody was trying to do the same thing,” said Vandergriff.
Learn how to apply for a PPP loan for your business by clicking this link.