Paycheck Protection Program Updates
Starting tomorrow, February 24, the Biden Administration will open a period when only companies with fewer than 20 employees are eligible to apply for loans through the Paycheck Protection Program (PPP). This two-week period begins tomorrow, Wednesday, February 24, through Tuesday, March 9. The Administration’s goal is to target small businesses and to make sure that they are included in the application process. If you are a small firm and have been having trouble getting the attention of your lenders, now is the time to apply. Please feel free to share this information with suppliers or other small businesses you work with. For more information on PPP and how to apply, please click HERE.
The overall deadline for businesses of any size to apply for PPP loans remains March 31, 2021.
Please read below for more information on the PPP process, including information for both second time and first time applicants as well as loan forgiveness.
Second Time Applicants
The SBA began accepting second draw PPP loans (for those who previously received a PPP loan) on January 13, 2021. The second draw loans can be for up to 2.5 times monthly payroll and can be used to fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, payments to vendors, worker protection costs related to COVID-19, and uninsured property damage caused by looting and vandalism during 2020. A borrower qualifies for the loan if (1) they have previously received a first draw PPP loan and have or will use the full amount only for authorized uses; (2) has no more than 300 employees; and (3) can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The application period is from January 13 until March 31, 2021.
The PPP Second Draw Borrower Application form is available HERE. This program is run through traditional lenders, so contact your bank, credit union, or other financial institution about how to access this funding.
For more information on the Second Draw PPP Loans, please visit the SBA website.
PPP Loan Forgiveness
Borrowers of both First Draw and Second Draw PPP loans may be eligible for loan forgiveness. The SBA has a recommended process of applying for loan forgiveness, which includes:
- Contacting your PPP Lender and completing the correct form.
- Compiling your documentation.
- Submitting the forgiveness form and documentation to your PPP Lender.
- Continuing to communicate with your lender throughout the process.
A more in-depth look at the loan forgiveness process and the necessary forms and instructions are available on the SBA website.
First Time Applicants
Many in the forest products industry have already taken advantage of the PPP loans to help stabilize business and retain employees. For those that have not, here is information on how the program works.
The PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on payroll. First Draw PPP Loans (for those that have not previously taken a PPP loan) can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
SBA will forgive loans if all employee retention criteria are met and the funds are used for eligible expenses.
- PPP loans have an interest rate of 1%.
- Loans issued prior to June 5, 2020, have a maturity of two years. Loans issued after June 5, 2020, have a maturity of five years.
- Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred ten months after the end of the covered period for the borrower’s loan forgiveness (either eight weeks or 24 weeks).
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees.
The following entities affected by Coronavirus (COVID-19) may be eligible:
- Sole proprietors, independent contractors, and self-employed persons
- Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- 501(c)(6) trade associations
- Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
You can apply for a First Draw PPP Loan until March 31, 2021.
The PPP First Draw Borrower Application form is available HERE.