Who Qualifies for a Second Round of Small-Business Relief?

The Paycheck Protection Program is back.

Between April and August, the program distributed $523 billion in forgivable government-backed loans to 5.2 million small businesses to help them keep paying their workers through the pandemic’s economic devastation.

Now it’s restarting, after Congress included $284 billion in new funding in the stimulus package it passed in December. Crucially, the program will give the hardest-hit businesses a chance at a second loan.

P.P.P. 2.0 makes other changes, too, including to eligibility and to limits for some loan sizes. Here’s what you need to know.

Who is eligible?

The new funding is available to both first-time applicants and returning borrowers.

For first-time applicants, most of the original rules apply. A company or nonprofit organization must generally have 500 or fewer workers, although companies in some industries can qualify with more employees. The applicants also must certify that “current economic uncertainty makes this loan request necessary” to support their continuing operations.

More groups are now eligible because of the recent stimulus bill, including nonprofit housing cooperatives, newspapers, broadcasters and local chambers of commerce.

Applicants must have been in operation on Feb. 15, 2020, to qualify. Self-employed business owners, including independent contractors, are also eligible for loans, but a rule imposed by the Small Business Administration requires sole proprietorships to have shown a profit on their 2019 tax return to qualify.

The rules are more strict for those seeking a second loan.

Larger business are not eligible: Second-loan applicants must have 300 or fewer workers. (Publicly traded companies, political lobbyists and members of Congress are barred from receiving a second loan.)

They also have to show a certain amount of hardship: a 25 percent drop in gross receipts between comparable quarters in 2019 and 2020. They must also show that they used all of the money from the first loan in allowable ways.

When can I apply?

As they were last year, the loans are issued by banks and other lenders. But some lenders got a head start.

Most borrowers can apply starting Jan. 19 at what are expected to be thousands of participating lenders, from major banks like JPMorgan Chase and Wells Fargo to fintechs like PayPal and Square.

A small group of community lenders were able to start taking applications a few days early. They include Community Development Financial Institutions, Minority Depository Institutions and Certified Development Companies — specially designated lenders that focus on underserved populations, including Black- and other minority-owned businesses.

Latest Updates

Banks and credit unions with $1 billion or less in assets can start taking applications on Jan. 15.

The deadline to apply is March 31.

How much will I get?

First-time borrowers are eligible for 2.5 times their average monthly payroll cost, up to $10 million. (For sole proprietors, the calculation is different. They can borrow 2.5 times the monthly profit they reported on their 2019 Schedule C tax form.)

Loans for second-time borrowers are capped at $2 million. Food services and lodging businesses, such as restaurants and hotels, can get loans of 3.5 times their average monthly payroll, but the $2 million cap still applies.

Do I have to pay the loan back?

Borrowers can have their loan forgiven if they follow the program’s rules.

At least 60 percent of the loan must be used to pay workers, and the rest must be spent on qualifying expenses. Borrowers can choose how much time they want to spend the money, as long as it’s between eight and 24 weeks.

Notably, borrowers don’t have to keep their employees’ head count and wages at pre-pandemic levels to have their loan forgiven, if they certify that they had to cut staff to comply with federal guidance on “sanitation, social distancing, or any other work or customer safety requirement related to Covid-19.”

Loans that aren’t forgiven carry a 1 percent interest rate and a repayment term that will generally run for five years.

The Second Stimulus

Answers to Your Questions About the Stimulus Bill

Updated Dec 30, 2020

The economic relief package will issue payments of $600 and distribute a federal unemployment benefit of $300 for at least 10 weeks. Find more about the measure and what’s in it for you. For details on how to get assistance, check out our Hub for Help.

    • Will I receive another stimulus payment? Individual adults with adjusted gross income on their 2019 tax returns of up to $75,000 a year will receive a $600 payment, and a couple (or someone whose spouse died in 2020) earning up to $150,000 a year will get twice that amount. There is also a $600 payment for each child for families who meet those income requirements. People who file taxes using the head of household status and make up to $112,500 also get $600, plus the additional amount for children. People with incomes just above these levels will receive a partial payment that declines by $5 for every $100 in income.
    • When might my payment arrive? The Treasury Department said on Dec. 29 that it had started making direct deposit payments, and would begin to mail checks the next day. But it will be a while before all eligible people receive their money.
    • Does the agreement affect unemployment insurance? Lawmakers agreed to extend the amount of time that people can collect unemployment benefits and restart an extra federal benefit that is provided on top of the usual state benefit. But instead of $600 a week, it would be $300. That will last through March 14.
    • I am behind on my rent or expect to be soon. Will I receive any relief? The agreement will provide $25 billion to be distributed through state and local governments to help renters who have fallen behind. To receive assistance, households will have to meet several conditions: Household income (for 2020) cannot exceed more than 80 percent of the area median income; at least one household member must be at risk of homelessness or housing instability; and individuals must qualify for unemployment benefits or have experienced financial hardship — directly or indirectly — because of the pandemic. The agreement said assistance will be prioritized for families with lower incomes and that have been unemployed for three months or more.

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