How Some Homeowners Can Get The New Government PPP Loans


From Erin Flynn Jay, Next avenue

The Biden administration is providing a lifeline to small business owners who struggled to stay afloat during the pandemic. The help can be particularly helpful for private companies. The need is urgent: 44% of small businesses are at risk of closure, according to the Alignable Research Center, a small business referral network.

However, you must act quickly to apply for this new assistance from the US Small Business Administration (SBA). Paycheck Protection Program (PPP), launched by Congress and the Trump administration in spring 2020.

The new PPP rules for small businesses

Now, the PPP loans are specifically aimed at businesses with fewer than 20 employees (including sole proprietorships) and there is a 14-day application window for them that runs through March 9th. (The entire PPP program expires on March 31, 2021.)

Some self-employed, independent contractors and sole proprietorships are also eligible for larger PPP loans than before. And the Biden government is allocating $ 1 billion to unemployed businesses in low- and middle-income areas owned by women and people of color.

But not all Homeowners or owners of other companies with fewer than 20 employees will inevitably qualify for the new rules.

The rules are constantly changing for some owners

Amy Renz, 51, is the CEO of 12-year-old Goodness Gracious Treats of Marblehead, Mass., A small-volume artisan who makes “human-grade” dog and cat treats (that is, all ingredients must be edible, human). Your company qualified for the first round of PPP loans and Renz was grateful for the money. But before the Biden government changed the rules again on March 3, it thought it would be disfellowshipped this time.

The new PPP rules would require a company with fewer than 20 employees (like Renz) to lose at least 25% of gross sales in each quarter of 2020, compared to that quarter of 2019. Gross sales refer to total sales in US dollars . Net profit is profit from the business – gross receipts minus the sum of goods and expenses sold.

“We do not qualify because we do not meet the sales loss requirements, although our net profit has certainly decreased for Covid reasons,” said Renz.

On March 3, the Biden administration relaxed this strict standard for sole proprietorships and independent contractors. Now these small business owners have the option to use gross income or net profit when applying for PPP loans.

Says Renz: “We have chosen to live like warriors – to do whatever we can to protect our revenues and therefore our employees. That is why we invested in our direct-to-consumer efforts last year and this year, especially for a better e-commerce platform and marketing. These investments were necessary to protect our revenues, but combined with rising costs, they have further weighed on our bottom line. “

Renz saw her small wholesale customers (independent pet stores) close their doors during the pandemic. some permanent. The sale of their business to grocery stores also stalled as the stores prioritized human essentials like toilet paper and cereal.

“In 2020, chicken, beef and pork prices have increased. There has been some leveling, but chicken prices have increased again. Right now, they are about forty-five percent above pre-Covid prices and are rising,” she says. “We are not only affected by rising food prices, but also by the higher costs of making materials – things like nitrile gloves, which we need to handle food safely, which have increased by about a hundred and fifty percent.”

The catch for unsuccessful PPP loans

Steve Silberberg, 59, the Hull, Massachusetts-based business owner of Fitpacking, who backpacks people on adventure travel to get fit, received approximately $ 5,700 PPP loan in 2020. He used the money to pay guides for trips that could otherwise have been canceled due to low attendance.

However, the PPP loan was unforgivable (when a loan can be granted or deferred in whole or in part). That’s because for forgivable PPP loans, applicants must have traditional staff. Companies like Fitpacking that pay their employees as contract workers don’t qualify for them. Fitpacking’s business is seasonal and not busy enough to keep the staff full-time. Silberberg has five employees and a dozen guides, but none are full-time or salaried employees.

Silberberg will skip applying for a PPP loan this time as it is unforgivable. “I will not take on any further debt this round, even if interest rates are low,” he said.

However, Renee Johnson, senior advisor at research firm Public Private Strategies Public Policy, says the new PPP rules could be of great help to many micro-businesses, especially minority-owned companies. Johnson notes that 95% of black businesses are sole proprietorships.

Apply for a PPP loan if you could use the assistance, Johnson says.

“Even if you think you are not eligible, apply. Find resources in your community, go to your local bank,” she says. “If you have a small business account with your bank, they should be able to support you and help you with this process. It is really important that small business owners take advantage of this moment [secure] this relief. “

4 Tips for Applying for a PPP Loan

Nishank Khanna, CFO of Clarify Capital, a lender that serves small businesses like corner shops, offers these four tips for applying for a PPP loan:

If you apply to more than one lender, the ultimate reward will be the bank that moves the fastest, which can be beneficial to you.

1. Check your documentation. Incorrectly completed documents can delay the PPP process. The easiest way to avoid kickback is to double-check your documentation to make sure it was filled out correctly.

2. Apply through multiple lenders. That’s because every bank has its own process for PPP lending.

“It is likely that some lenders will be more efficient and faster than others in the loan approval process,” says Khanna.

As soon as the SBA has assigned you a so-called Preferred Lending Partner number, you will no longer receive multiple loans from different lenders despite the application from several banks.

According to Khanna, applying to more than one lender will ultimately reward the bank that moves the fastest, which could be beneficial to you as speed is of the essence.

3. Go through local banks and credit unions. They should be your first stop, says Khanna, because the government has its own pool of funds that it distributes to small lenders.

4. Use small lenders that you have relationships with. “It may sound like a cliché, but with larger banks and financial institutions, they’re often just a number,” says Khanna. “When you have a lender who knows you and is ready to walk you through the process, you have an advantage.”

The Small Business Administration and the Public Private Strategies Institute host a number of free PPP webinars from now until March 8th to explain the new rules, each with a specific focus (women entrepreneurs; minority business owners; self-employed women entrepreneurs; restaurant owners; veterans and LGBTQ business owners).

(Editor’s note: This article is part of America’s Entrepreneurs, a Next Avenue initiative made possible by the Richard M. Schulze Family Foundation and EIX, the Entrepreneur and Innovation Exchange.)


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