How the Latest Stimulus Package Affects Small Businesses

1/27/2021

In late December, the federal government okayed a new stimulus package with monies for small businesses suffering from COVID-related losses. The original round of Paycheck Protection Plan (PPP) funds ran out late last summer.

“The new package is all positive for businesses,” says Grant Franklin, Executive Vice President and Chief Sales Officer with Town and Country Bank and Peoples Prosperity Bank. “Those that missed out on the first rounds of funding (last year) can now apply for a PPP loan, and those businesses that have experienced a 25% reduction in revenue in 2020 over the same period the previous year can apply for a second PPP loan.”

“The package is aimed at getting money to businesses to keep them open and keep people employed,” says Mark Wagner, Small Business Administration Program Manager for Town and Country Bank and Peoples Prosperity Bank. It increases the kind of expenses PPP Loans can be used for, lets the hospitality and food industries ask for higher loans, allows businesses in bankruptcy to apply, and includes monies for performing arts venues, movie theaters, and cultural institutions.

What businesses are eligible for a PPP loan?

There are two types of loans in this package: the First Draw PPP Loans are for companies that have not received a PPP loan before, the Second Draw PPP Loans are for those who received one but still need financial help.

There are a lot of rules about eligibility, but in general, businesses that, with their affiliates, have fewer than 500 employees are eligible for a First Draw (or first time) PPP Loan. A business can qualify for a second PPP loan if it: has fewer than 300 employees, has already received a PPP loan and has used it or will use it for eligible expenses, and can prove they had “at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.”

How much money can we get?

Up to $10 million if it’s your first PPP Loan, or up to $2 million if it’s your second.

What can we use the funds for?

According to the Small Business Administration, businesses can use the loans for “payroll, including benefits, mortgage interest, rent, utilities, worker protection related to COVID, uninsured property damage caused by looting or vandalism in 2020, and certain supplier costs and expenses for operations.”

The PPP Loans cover payroll for employees for two and a half months for most businesses, according to Wagner. “However, if you run a restaurant, hotel, or are in another industry that was also hit extremely hard, it will cover three and a half months of the average employee payroll, in general.”

Do I have to apply fast since the last funds ran out quickly?

No. That was an issue with the first PPP loans. “There are many protections in this package to make sure the money doesn’t go out so quickly,” Wagner says. “I’ve been told by the Small Business Administration and the U.S. Treasury that there will be plenty of money for everybody, that people don’t have to panic to get their application in first.”

What’s the deadline to apply?

March 31, 2021.

Are these loans forgivable?

Yes, provided your business uses the loans for acceptable expenses, including 60% for payroll, and maintains staff and compensation levels. “This new package has streamlined the forgiveness process for loans of $150,000 or less, which allows more forgiveness applications to be processed faster,” Franklin says.

What websites can provide additional assistance?

Can Town and Country Bank and Peoples Prosperity Bank help me?

Yes. Our bankers will help you with any aspect of applying. “We can provide them with the application, explain what the requirements mean, make sure their application has no errors or missing documentation, make sure the business is asking for the right amount of loan, and keep them informed about the status of their application,” Wagner says.

For assistance with applying for a PPP loan, contact us today online or call our Customer Service Solution Center at 1-866-770-3100.