As Congress continues to debate the framework of a $908 billion COVID economic relief plan, we are all hoping that additional aid may be on the way for small businesses.
The Senate’s “Gang of 8” Proposal designates $300 billion to support small businesses with another round of PPP (Paycheck Protection Program) funding and Economic Injury Disaster Loans (EIDL) to become available. The proposed package also contains a simplified forgiveness process for PPP loans of less than $150,000 and allows expenses paid with those funds to be tax-deductible.
The $300 billion focused on helping small businesses is geared toward companies that can demonstrate real economic hardship. This round of PPP funding will include forgivable expenses like supplier costs, investments in upgrades, and the PPP necessary to operate businesses safely and effectively throughout the remainder of the pandemic. The previous PPP plan’s allowable expenses and the 60%/40% allocation between payroll and non-payroll costs required for full forgiveness are still pertinent.
Economic necessity will be a significant factor in attaining an additional PPP loan, and borrowers will need to demonstrate declines in revenue to qualify. Loan amounts will once again be based on 2.5 months of payroll costs, and the proposed maximum loan amount is $2 million.
Now is an excellent time to prepare to apply for the next round of PPP loans. Take a few moments to gather your financial data to support your revenue loss and need for additional funding.
Compile such data as:
- Proof of significant revenue reduction (at least 30% during any quarter of 2020)
- Your total number of employees
- Current operating expenses
- The timing of when your initial PPP funds were exhausted
Having this information ready to go will give you a jumpstart in preparation for the initial application process.
While the coming days are still a “wait and see” situation, the program will be rolled out quickly once passed.
If you think you meet the eligibility guidelines, sit down with a cup of tea, snitch a few leftover Christmas cookies, and start gathering your documentation now.