Sign Up For Ppp Loan – If you’re a small business owner struggling to survive during the pandemic, hang in there because help is on the way. The US Treasury Department and the Small Business Administration (SBA) have reopened the Payroll Protection Program (PPP), but this time with some significant differences.
Officials introduced new terms and conditions designed to quell problems arising from the first round of PPP loans. For example, a damning report by The Washington Post found that more than half of the $552 billion in PPP1 funding earmarked for small businesses went to larger businesses — sparking national outrage and calls for stricter guidelines. Critics have also called for more clarity on eligibility for pardons.
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“Today’s guidance builds on the program’s success and adapts to the changing needs of small business owners by providing targeted assistance and a simpler forgiveness process to ensure their path to recovery,” Administrator Jovita Carranza said in a joint press release provided by the Treasury Department. and the SBA on January 8.
Ppp Forgivable Loans Will Be Unforgiving For Many
Of course, small business owners have questions about the newly introduced changes. We are here to help you with that. Scroll below for answers to our most frequently asked questions.
PPP2 is part of a comprehensive economic stimulus package for COVID-19 called the Economic Relief Act. The legislation, which was passed on December 27, 2020, gave the SBA 10 days to provide guidance on how the $284 billion PPP2 fund would be allocated.
To ensure that small businesses in underserved communities receive first-push efforts, SBA has decided to prioritize access to small businesses applying to community financial institutions (CFIs). Minority depository institutions, community development financial institutions (CDFIs), certified development companies and microloan intermediaries fall under the CFI umbrella. Therefore, the first two opening days of PPP2 (January 11 and 12) were specifically reserved for first-time borrowers who applied through CFI. This ensured that underprivileged companies that had difficulty obtaining a loan during the first round were given an advantage in the second round.
On Wednesday, January 13, applications opened for other borrowers who applied through CFI. Every day, the program will be available to the vast majority of lenders and borrowers. Until then, we recommend that companies apply in advance using the PPP provisional application form. Once completed, applicants will be able to apply for funding as soon as the Treasury Department and SBA open the program.
Expert Advice On How Small Businesses Should Use Ppp Loans
To qualify for a second PPP loan, businesses must prove that they have suffered at least a 25% loss in revenue. Under the current Interim Final Rule (IFR) on second-draw PPP loans, revenue is recorded using gross receipts.
Broadly speaking, the IFR definition of gross receipts covers all forms of income received or accrued (depending on the company’s accounting method) from any source, including sales, fees, rents, royalties, interest, dividends or commissions, less returns and allowances.
Calculating the reduction of income with gross receipts is easy – if you are up to date with your bookkeeping. All you need to do is select a quarter from 2020 and compare it to the same quarter from the previous year (2019).
If you are behind with your bookkeeping and need to catch up, we can help you. Contact us for a customized offer.
Ppp Loan & Forgiveness Ultimate Guide
Not! If you received a PPP1 loan, you are not required to apply for forgiveness before applying for a PPP2 loan. In this regard, the law requires companies to either use all funds from their first PPP loan or plan to use all remaining funds before they can apply for a second loan. The SBA may issue additional intent-to-use guidance in the coming days, so keep an eye out for that.
That! Even if you have received the maximum amount awarded for PPP1 ($10 million), you can still qualify for a PPP2 loan (maximum: $2 million). Remember: Eligibility is based on proving that you have suffered a loss of income equal to or greater than 25%, measured in terms of gross receipts.
For most borrowers, the maximum amount you can apply for is 2.5 times your average monthly salary expenses, or up to $2 million. However, there is an exception for borrowers in the accommodation and food sector.
Businesses with a NAICS code beginning with 72 can qualify for a loan amount up to 3.5x salary, with a cap of $2 million. If you operate a business with a NAICS code that begins with 72 and are applying for a PPP loan for the first time (known as First Draw), you will qualify if you have 500 employees or fewer. If you are applying for a PPP loan a second time (AKA Second Draw), you will only qualify if you have 300 employees or less per location and meet the income loss requirements. Hotel or restaurant locations with a common parent company can be registered independently only if they operate as separate legal entities.
Biden Signs Ppp Extension Into Law, Moving Application Deadline To May 31
PPP2 offers more flexibility in how the funds can be used. To be eligible for full forgiveness, at least 60% of the loan must go towards salary costs. The remaining 40% can be used to cover a wider range of business expenses than was allowed during PPP1. For example, in addition to paying rent or mortgage and utilities, PPP funds can now be used to cover the cost of personal protective equipment and other COVID-related safety costs incurred as a result of government-ordered mandates. Funds can also be used to cover vendor costs, property damage and cloud computing.
Is it hard for you to imagine all that? It’s a lot to take in, we know. Here’s a quick snapshot you might find useful, courtesy of Paychex:
If you have additional questions that we haven’t answered here, please feel free to contact us at (858) 633-3573 or via email at info@. We will be happy to help you gather the financial information you need to file an accurate return.
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Reasons You Should Still Apply For A Ppp Loan
“I like to do my own bookkeeping!” said no entrepreneur, ever. Enter: virtual bookkeeping—the easiest, fastest, and cheapest way to offload this menial task to someone else. Best of all, you’ll never even have to look that poor soul in the eye. In all seriousness, virtual bookkeeping has a unique set of benefits that differ… The Payroll Protection Program was introduced in April 2020 and offered fully forgivable loans to the self-employed. Changes have since been introduced to make it easier to get PPP loan forgiveness for the self-employed.
Editor’s note: On February 22, President Biden announced changes to the Wage Protection Program. One change allows self-employed people to file by gross income as long as they submit a Schedule C. This affects loans taken out on or after March 3, 2021. Watch our video below for an overview and read our guide on how to calculate gross revenue for PPP.
Forms 3508S and 3508EZ are simplified versions of Form 3508. Self-employed workers can use either of the simplified versions to make applying for PPP loan forgiveness easy.
Note: You will not need to complete these forms yourself. Instead, you apply for PPP forgiveness through your PPP lender, probably through an online application portal. Your lender uses these forms to make your application.
How To Apply For A Ppp Loan
Let’s go through which one is right for you and what you need to do to ask for forgiveness today.
This form is the simplest of the forgiveness request forms. When applying, you do not need to show your calculations or submit any documents.
