Second round of paycheck protection program funds available
More help is on the way for businesses who want it.
A second round of Payment Protection Program (PPP) funds have been approved by the federal government for businesses affected by slowdowns caused by the COVID-19 pandemic last year.
The new funding restructures the parameters of the funding, which opened up to businesses on Jan. 13.
The new batch limits funding to business owners who had a 25% loss in revenue or more for any comparable quarters between 2019 and 2020, and limits those funds to companies with 300 employees or less. Previously, businesses with up to 500 employees were eligible.
Neil Shnider, a local CPA who works part-time for Florida Gulf Coast University’s Small Business Development Center, helped steer many local businesses through the application process the first time around.
“The rules and regulations are a little stiffer,” he said of the new round.
For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.
“They felt the restaurants got hit harder so they are going to give them more money,” Shnider said.
The funding can be used for operational expenses, as well as supplies relating to safety that is COVID-19 related (masks, cleaning and sanitary products) as well as unrelated safety issues (lighting).
At least 60% has to be used on payroll including health care benefits, though businesses can use as much as 100% for payroll if they wish. Funds can 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. The loan terms require that at least 60% be used for payroll.
Economic Injury Disaster Loan (EIDL) grants opened up Tuesday and will be limited to low-income communities where there are poverty levels of at least 20%, or 20% of the average family income in the state, Shnider said. A 30% economic loss would need to be shown for the EIDL money.
“They are trying to help those that were hit the worst,” Shnider said.
Businesses that received the full $10,000 EIDL grants last year won’t be eligible for any funds this year, but for those that received less than the maximum, they are eligible for the difference.
Businesses could receive $1,000 for every employee up to $10,000 for the grant.
Hundreds of small businesses in Lee County were aided by the Paycheck Protection Program last year, providing much-needed relief to companies who suffered through the devastation caused by state-ordered and locally-mandated closures and restrictions during the COVID-19 pandemic.
There was some confusion last year as to whether the EIDL money would be taxable. Under the new law, no EIDL funds which were dispersed last year or this year will be taxable. In addition, any PPP fund expenses are tax deductible.
According to Shnider, PPP loans up to $150,000 will be forgiven under the new law. For loans over that amount, businesses have 30 years to pay it back at a 3.75% interest rate with the ability to defer payments for one year.
More than $30 billion was distributed statewide to companies through the Small Business Administration as part of the CARES ACT last year. Nationwide, more than $525 billion has been distributed to more than 5 million small businesses and nonprofits, according to U.S. Senator Marco Rubio (R-FL).
Rubio, who pushed for a second round of funding, more than 70% of small businesses in the country received PPP funds.