Congress passed a $900 billion pandemic relief package Monday that supplies more than $300 billion in relief for small businesses, including a second round of the Paycheck Protection Program (PPP). The package has been sent to the White House, where President Trump is expected to sign it into law.
The new round of PPP funding will include some changes from the first round of PPP made available earlier this year. Here’s what tanning salon owners should know about the new PPP funds:
- These “second draw” loans are targeted at hard-hit businesses that employ 300 or fewer employees and that have used or will use the full amount of their first PPP loan. The maximum loan under this program is $2 million, based on two and a half months of average annual payroll. The measurement period for the payroll can either be calendar-year 2019 or the one-year period before the date the second draw loan is made.
- Borrowers must show a 25 percent decline in revenue in the first, second, or third quarter in 2020 as compared to the same quarter in 2019 (if the loan application is after December 31, 2020, then a fourth quarter comparison may be used as well).
- Under the Consolidated Appropriations Act, lender review is limited to whether the lender received a complete application with all fields completed, initialed, or signed as applicable. If the submission is complete, the lender is required to accept it and forward to the SBA.
- Four additional categories were added for nonpayroll costs eligible for use of the PPP loan proceeds (subject to overall limitation that 60 percent of loan must be used for payroll costs): Covered Operations Expenditures; Covered Property Damage; Covered Supplier Costs; Covered Worker Protection Equipment.
- For any loan up to $150,000, the covered loan amount will be forgiven if the borrower submits a one-page online or paper form listing the loan amount, the number of employees retained, and the amount of the loan spent on payroll. This will substantially reduce the burden on both borrowers and lenders.
Most importantly, salons should contact their local SBA provider and get in line early as the second round of funding is expected to go fast. Start preparing your financials in advance and be prepared to submit your application as early as possible. For more information, contact your local SBA provider.