PPP Loan Updates

Out of the $310 billion allocated by Congress to the Paycheck Protection Program (PPP) in its second round of funding, approximately $130 billion still remains to be claimed by small businesses just like yours. Don’t wait for this opportunity to pass you by, as applications will continue to be accepted until June 30th, 2020 or until all funds have been dispersed.

But that’s not all! With the passage of the Paycheck Protection Flexibility Act, new guidelines for the PPP Loan Forgiveness Program were established which grant additional lenience to small business owners who received or will receive funding. For your convenience, I have summarized the changes made to the forgiveness program below.

Less Money Must be Spent on Payroll

Previously, to be eligible for loan forgiveness, small businesses were required to spend 75% of their funding on payroll expenses. Now, however, that threshold has been lowered to 60%, allowing for more freedom in how you spend your money.

More Time to Rehire Staff

Per the old rules of the program, small business owners were only given until June 30th, 2020 to meet employment criteria if they were to qualify for full forgiveness–which meant maintaining or returning to their average number of employees as of February 15th, 2020. The new rules extend that deadline to December 31st, 2020, giving small business owners significantly more time to rehire any staff members who were laid off during the COVID-19 pandemic.

Businesses may also qualify for full forgiveness if they legally cannot operate at full capacity due to coronavirus-related workplace safety mandates.

 More Time to Spend Funds

Rather than having a mere eight weeks to spend their PPP funds, small business owners will have 24 weeks to spend their money from the day they receive their loan. However, this only applies until December 31st, 2020. So the rule is: 24 weeks or December 31st, 2020, whichever comes first.

 Longer Repayment Period

Finally, small business owners will now have more time to repay any amount of the loan which was not forgiven. Before, the repayment time was only two years, but it has now been extended to five under the new regulations for any loan made on or after June 5th, 2020. For small businesses that received loans before June 5th, they can request an extension via their lender.

So if you are a small business owner wondering whether the PPP Loan is worth it for your business, consider the above changes made to the criteria for forgiveness. The PPP Loan has never been more lucrative than it now is under the new guidelines, and your business would be remiss to ignore this valuable resource.

If you have further questions regarding the forgiveness program and PPP funding, the Small Business Administration (SBA) has outlined the new criteria in greater detail on their website, where you can also find the appropriate application forms. Additionally, I will personally be answering any questions you may have in my Facebook group, Women Entrepreneurs Creating Change. If you are a woman small business owner, I invite you to join the group to stay updated on policy and legislation affecting small businesses while benefiting from the various exclusive resources I offer to my inner circle.