1-27-2021 – New round of aid available for small businesses

Posted on: January 28th, 2021 by admin

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January 27, 2021

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By GARRETT STELL GSTELL@NEWSTOPICNEWS.COM

Jan 27, 2021 Updated 12 hrs ago

 

Small business owners can apply for new funding from the federal Paycheck Protection Program, and borrowers who were approved last year can return for a second round of funding provided they meet more restrictive criteria.

 

Congress brought back the lending program in a Dec. 27 bill that allocated another $284.5 billion in forgivable coronavirus relief loans. That amount includes $137 billion for “second-draw” loans for businesses that already received loans in the first round of PPP last year.

 

The loan offers up to 2.5 times a company’s monthly payroll, up to $2 million for most eligible businesses. But businesses that are classified in the hospitality industry can receive loans at 3.5 times their average monthly payroll.

 

Sharon Harvey, senior area manager of the Asheville region with the U.S. Small Business Administration, spoke to business owners in Western North Carolina on Wednesday and said that the loans are fully forgivable as long as business owners spend the money only on acceptable expenses, which include payroll, operations expenses, property damage suffered during civil unrest and purchases of personal protective equipment for customers and employees.

 

But “PPP is designed for your employees to stay on the payroll, and of the money that is disbursed to you, 60% of that is for employees,” she said, and no more than 40% of a loan can be spent on other eligible expenses.

 

That means that the 1-% fixed interest rate associated with all PPP loans will take effect if business owners fall below that 60% threshold. Otherwise, the loan can be entirely forgiven.

 

Harvey reminded business owners that applying for a PPP loan is free and that no one should enter a deal to pay someone to submit an application on their behalf. The deadline to apply is March 31.

 

The new round of PPP loans will be offered to first-time borrowers with 500 or fewer employees who can show that they have experienced at least a 25% revenue reduction in any comparable quarter from 2019 to 2020 and meet the other guidelines.

 

Businesses that received funding from a PPP loan in 2020 can apply for another round if they have fewer than 300 employees.

 

Caldwell Community College and Technical Institute’s Small Business Center and the Caldwell Chamber of Commerce shared information Wednesday to help local small business owners understand the opportunities that are available with the new round of PPP funding. PPP loans are not taxable income and expenses paid with PPP funds are tax-deductible.

 

CCC&TI Small Business Center Director Carmela Tomlinson encouraged business owners to work with their existing lender to submit a PPP loan application. The SBA also offers a lender matching program at www.sba.gov/lendermatch to help connect business owners to eligible lenders if they do not have one already.

 

Reporter Garrett Stell can be reached at 828-610-8723.

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