Good news if your business has been struggling due to COVID-19 or the lockdowns. The federal government has extended the Paycheck Protection Program (PPP) through the end of May to allow companies more time to apply and to allow more time to process the applications.
The PPP offers forgivable loans to small businesses that have struggled during the pandemic. In February, the Small Business Administration opened another round of lending with additional fraud controls.
When is a PPP loan forgivable?
According to the SBA, whether your PPP loan is forgivable (turned into a grant) depends on when you took out the loan. For a first or second loan (“draw”) from the PPP, the terms for forgiveness included provisions that you had to meet during the 8- to 24-week period following receipt of the loan:
- Maintain your current employee and compensation levels
- Spend the loan proceeds on payroll costs or other eligible expenses
- Spend at least 60% off the loan proceeds on payroll costs
Applying for forgiveness involves obtaining a loan forgiveness form from your lender and including documentation of your use of the loan. This may include, for example, bank statements, payroll service provider reports, tax forms showing payroll taxes, payment receipts or account statements. The forgiveness form and documentation are then submitted to your lender.
Focus on smaller businesses
Due to early criticism that the PPP program was lending mostly to large businesses, the second round involved controls meant to direct the money towards smaller businesses. It also expanded eligibility for the program to nonprofits.
Now, the program has been extended until May 31, with the SBA having 30 days beyond that to process loan applications.
One reason many larger businesses were able to access the program is that they had access to lawyers. If your business is struggling, you should consider the advantages of having an attorney help you access the program.