HIGH COUNTRY — The Paycheck Protection Program (PPP) is once again offering financial assistance to businesses that have been impacted by the pandemic through the Emergency Coronavirus Relief Act, which infused $284 billion into the program.
This time around, the loans are geared toward assisting small business with 300 or fewer employees that have sustained revenue loss of 25 percent or more in any quarter of 2020. As details on the program continue to come out, organizations such as the Senior Core of Retired Executives (SCORE), have been assisting entrepreneurs and business owners in their decisions on whether or not to apply for the funding.
SCORE is the nation’s largest network of volunteer business mentors who have expertise in a variety of business-related fields. The nonprofit organization is a resource partner with the U.S. Small Business Administration and has provided mentorship to 11 million entrepreneurs since opening its first chapter in Asheville in 1964.
“The first time around when the Paycheck Protection Program was put out, the intent was to try and target it toward small businesses and less toward medium and large businesses. So I think it can potentially help people in our area. In addition to PPP, the Economic Injury Disaster Loan (EIDL) has been extended through this year. Those who may not benefit from the economic protection program should be able to look at (EIDL) too,” Thomas Mock, SCORE mentor in Asheville, said.
Throughout the pandemic, among the industries most severely affected have been the restaurant and tourism industries. The new round of funding offers an opportunity for the many local businesses throughout the region to recover funds lost during the pandemic and, most importantly, to retain employees.
“One of the things that we at SCORE have seen is that businesses that have been able to pivot to their customers have typically fared better than those who haven’t. There are some businesses like restaurants that simply can’t change the way they do business. A lot of retail businesses have gone online. There is one butcher shop here in Asheville that is switching to curbside delivery and implemented an online ordering system, and they have been able to retain most of their customers,” Mock said.
Similar to the last round of funding, the PPP loans are able to be forgiven for certain expenses, such as payroll, rent, mortgage and utilities. Mock says that typically the SBA wants to see that loan recipients are using about 75 percent of their loan amount to cover these types of expenses.
“The one caution that I will put on a lot of these things is that if you’re getting a loan that is more than $25,000, typically the lender is going to require a personal guarantee,” Mock said. “For example, in the case of EIDL, if you’re taking out a loan more than $25,000, they’re going to want you to use your personal assets as collateral as well. We’ve had a number of clients decide not to take the loan because they were concerned about that provision.”
According to Stone Bank’s Small Business Administration Division and the SBA, highlights of the new program include the following:
- PPP borrowers can set their PPP loans covered period to be any length between 8 and 24 weeks to best meet their business needs.
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
- The Program’s eligibility is expanded to include 501©(6)s, housing cooperatives, destination marketing organizations, among other types of organizations.
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount, and certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
- The maximum second draw PPP loan amount will be the greater of $2 million or 2.5 times the average monthly payroll, similar with the initial, first draw PPP loans.
- For second draw PPP loan applicants seeking up to $150,000, there will be a simple certification submission attesting to their qualification based on quarterly revenue reductions, number of employees, and so forth, thus expediting these submissions when borrowers work with an experienced lender.
- The law provides full tax deductibility of business expenses on forgiven PPP loans (on both first and second draw PPP loans).
- The law repeals the CARES Act provision requiring borrowers to deduct the EIDL.