Here's a Breakdown of the Next Round of PPP Loans for Struggling Businesses


The Small Business Administration and the Treasury Department are preparing to revive the Paycheck Protection Program five months after its first two rounds of funding ended.

In the latest round, businesses that received loans last year will be able to borrow up to $2 million as long as they have no more than 300 employees and suffered at least a 25 percent drop in quarterly revenue.

First-time borrowers with no more than 500 workers will be able to receive up to $10 million.

The loans, which can be forgiven, will have five-year terms and an interest rate of 1 percent.

The SBA will initially accept only applications submitted by community financial institutions, or CFIs, lenders whose customers are minority-owned and economically disadvantaged businesses.

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Starting Monday, applications for first-time borrowers submitted by these lenders will be accepted, followed by applications for second loans on Wednesday. The SBA said it would begin accepting applications from all its lenders within a few days of the initial period reserved for CFIs.

As with the first two rounds of the PPP, applications must be submitted online at banks and other SBA-approved lenders. All applications must be submitted and approved by March 31.

Loan amounts are calculated using a company’s payroll expenses; businesses can use either their 2019 or 2020 payroll to compute how much they can ask for.

Companies will have 24 weeks from the date they receive a loan to use the money.

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While 60 percent of the proceeds must be used for payroll in order for loans to be forgiven, companies can use the rest for employee health benefits, mortgage interest, rent, utilities and expenses that are essential to business operations.

The PPP is being restarted under the coronavirus relief bill Congress approved in late December, providing for $284 billion in new loans.

The first two rounds, which began April 3 and ended Aug. 8, gave out more than 5.2 million loans worth $525 billion.

But for many businesses, including restaurants, gyms and retailers, the money was not enough. It’s estimated that well over 100,000 small U.S. businesses have failed since lockdowns began.

Moreover, many companies weren’t able to get loans, including newly formed businesses and those whose financial records didn’t meet bank requirements.

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Many businesses applied to multiple banks, often because they couldn’t get a response to their applications and subsequent inquiries — and many of these business owners gave up in frustration or ran out of time.

Jason Tyler expects business at his limousine service to be down by as much as half this month. He needs a second PPP loan just to keep the business going.

Tyler, owner of Prestige Transportation, which serves the Kansas City metropolitan area, used his first loan to pay the people who drive his seven limos, but there was one worker he couldn’t afford to rehire. He was also forced to sell one of his cars to bring in badly needed capital.

For Nancy Sinoway, a second loan would increase the chances that her dressmaking business will survive.

“I could use it for marketing, for new samples. I could use it as a lifeline,” said Sinoway, who designs and makes dresses for occasions like weddings and proms.

She was flooded with order cancellations starting in early March as lockdowns hit and large gatherings and events were canceled.

Sinoway got a Paycheck Protection Program loan last May and used it to pay her three employees. But the loan money fell far short of what she needed to maintain her Port Washington, New York, shop. She had to close it and move the business into her home.

Some owners, while struggling, aren’t rushing to apply for a second loan.

Jim Sheets, who owns a framing store and art gallery in Rochester, New York, wants to see how much of his first loan will be forgiven before deciding on a second round.

“At this point, I hope that I don’t need it,” he says.

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