PEORIA, Ill. (WMBD) — The Paycheck Protection Program is back for struggling businesses.
On Monday, borrowers who are considered “community financial institutions” were able to take advantage of the PPP loans for what’s called a “first draw” according to the Morton Chamber of Commerce and EDC.
Wednesday, borrowers will be able to take a second draw of the loans.
This new set of PPP has more flexibility than the first round. Not only can it help pay rent, utilities, and mortgage interest. Now it can pay for PPE, operating costs, supplier costs, and any property damage caused by “public disturbances” that aren’t covered by insurance.
The Illinois Small Business Development Center at Bradley University (SBDC) has a summary below of the Paycheck Protection Program:
- PPP Funding Levels: Loans (which would be forgivable if used for allowable expenses) will be 2.5 times average monthly payroll. Restaurants and accommodation (lodging) businesses receive 3.5 times average monthly payroll.
- More Flexibility in Allowable Forgivable Expenses: The new PPP has even more flexibility than the 2019 PPP program. Prior allowable expenses remain: payroll, utilities, rent, and mortgage interest. New eligible use of funds includes:
· Personal protective equipment (PPE) and adaptive investments to help small business owners comply with health and safety guidelines;· Operations expenditures for payments on software and other items for human resources and accounting needs;· Supplier costs that are essential to business operations, including perishable goods; and· Property damage caused by public disturbances that aren’t otherwise covered by insurance.
- Easy Loan Forgiveness: for loans up to $150,000, the forgiveness application is a single page certification with only essential information. Borrowers receive full loan forgiveness if they spend at least 60% of their PPP on payroll costs over a time period of their choosing between 8 weeks and 24 weeks.
- Second Draw PPP: Businesses that received a PPP loan in 2019 may apply for a second PPP if they have less than 300 employees and have revenue reduced by at least 25 percent. (This is called Second Draw PPP.) Maximum amount is $2 million.
- Priority Consideration: is provided for specific businesses including minority- and women-owned businesses. Specific funding has been set-aside exclusively for first-time PPP applicants with 10 or fewer employees.
- Deadline to Apply: The deadline for PPP2 is March 31, 2021.
- Sole Proprietors May Apply: The PPP does allow a sole proprietor with no employees to apply if their business showed a net profit on their Schedule C.