Small Businesses Can Apply For PPP Loans Again Thanks to a Second Round of Funding

The COVID-19 pandemic has upended daily life. Lockdown measures in states across the country have closed countless small businesses including restaurants, hair salons and gyms, just to name a few. Customers who venture out of the house do so with masks, hand sanitizer and bleach wipes to find shuttered storefronts and darkened windows. A recent survey of nearly 6,000 small business owners found more than 30% of respondents run the risk of closing permanently if current conditions persist for two months.

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in late March. Included in the bill is $349 billion for the Paycheck Protection Program (PPP). However, the initial amount allocated to the program dried up quickly, as nearly 2 million small businesses in the U.S. applied and received relief. In addition to the first stimulus package, a second $484 billion funding bill – mostly aimed at replenishing funds for the PPP program – was passed by the House in late April. According to the Small Business Administration, more than 1.6 million small businesses have received PPP funding so far.

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In this article

    Can your business still apply?

    Thanks to a second round of funding from Congress, the PPP is open to applications again. Bluevine — The Simple Dollar’s top pick for the best small business loans of 2020 — is accepting and processing applications.

    “This is a great way to help businesses stay afloat for the next eight weeks and give those struggling a fighting chance to not only save their business but retain key employees so the business can run and the employee can take home a paycheck,” said New York-based financial lawyer Leslie H. Tayne.

    What is the paycheck protection program?

    The loan program is meant to help small business owners who have been impacted by COVID-19 and the resulting government-ordered closures. The U.S. Small Business Administration oversees the program, which began in early April and is slated to end on June 30 of this year.

    “The PPP allows for monies to be spent on payroll, rent, mortgage interest and utility payments,” said Emily D. Baker, a lawyer specializing in online business. “However, for the amount loaned under the PPP to be forgiven, you must spend 75% of the money on payroll and not more than 25% on rent, mortgage interest and utilities.”

    Be sure to check the fine print. Funds can be used for things like rent and utilities but those agreements and/or services needed to have been in place before February 20, 2020. Loans will be forgiven if funds were used to cover payroll costs incurred during an eight-week period after the loan was issued, and if both employee levels and compensation remained the same.

    Each qualifying business can receive one loan under this program and there’s a $10 million dollar cap. Loan amounts vary and are determined by looking at your average payroll costs over the past 12 months. Eligible businesses can receive loans of up to two-and-a-half times their average monthly payroll costs.

    To put this in perspective, if your business’s average payroll costs come out to $2,500 then the maximum amount you could receive under this program is $6,250. Keep in mind these funds are meant to cover two months of payroll expenses. The hope is that the lockdown orders will be lifted by then and businesses can reopen.

    Would my small business qualify for the Paycheck Protection Program?

    There’s some language here to pay attention to. According to the Treasury Department, “all businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply.” If you dig a little deeper you’ll see the rules vary by industry.

    “For some industries the size standards vary,” said Baker. “A restaurant chain may break down by location and not the entire chain and some farming industries are judged by revenue and not employee size.”

    You may own a local restaurant chain that employs more than 500 people but, so long as one location doesn’t have more than 500 employees then you would still qualify for a loan under this program.

    The list of who may not qualify is long and tends to concentrate on industry and activity. Some are obvious. If a business is engaged in illegal activity, then it isn’t eligible for a PPP loan. Since the federal government hasn’t decriminalized marijuana and these are federally backed loans, those in the cannabis industry don’t have access to the PPP relief. Other businesses in this list include those that make more than one-third of its income from gambling or who are involved in the adult entertainment industry. Business owners who are delinquent on federal loans are also banned from receiving funds.

    How do I apply?

    If your business has made the cut, here’s a look at the application process.

    • The first step is finding an approved vendor. Bluevine is our top pick for small business loans but there are others. Generally, any participating federally insured bank, credit union or Farm Credit System falls into this list but be sure to check.
    • Visit the SBA website and download the application.
    • The form is short and straightforward. The information you’ll need to include is material most small business owners already know: number of employees, average monthly payroll and Business TIN.
    • Complete the application and return it to your lender.

    Experts Cited

    Emily D. Baker

    Lawyer, EmilyDBaker.com

    Emily D. Baker is a former Los Angeles County Deputy District Attorney. She currently runs her own law practice specializing in online business.

    Leslie H. Tayne

    Managing Director, Tayne Law Group, P.C., Attorney-NewYork.com

    Leslie H. Tayne is the founding and managing director of Tayne Law Group, P.C., a law firm headquartered in New York dedicated to debt solutions.

    More Resources

    At the Simple Dollar, we have been following COVID-19 since the start. Check out the articles below for resources and the latest news on financial relief from the coronavirus.

    Eric Wilson Edge

    Contributing Writer

    Eric Wilson-Edge is a freelance journalist who has covered personal finance, banking, the economy and other topics for The Simple Dollar, The Seattle Times, Narratively and elsewhere.