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The new deadline for trying to get a PPP loan is May 31, 2022. Learn more about round 2 PPP loans in our updated guide.
2022 was a rough year for people, and many small business owners were hit particularly hard. Fortunately, using the year comes a brand new bill offering COVID relief for all those businesses impacted by the coronavirus. On December 27, 2022, President Mr . trump signed into law the Consolidated Appropriations Act, 2022. Shuffling through this 5,593-page bill isn’t something which the average person is ready to do, so let’s cut to the chase. For small businesses, what sticks out about this bill is that it provides funding for round two Paycheck Protection Program (PPP) — something many small business owners used in 2022 to keep their businesses afloat.
The bill allots $284 billion to the second round of PPP funding, granting business people additional relief by means of forgivable loans. As government mandates continue to keep some businesses shuttered or under strict regulations, a PPP loan might be just what you need to keep the business on track in 2022, whether or not or not you took part in the very first round.
In this short article, we’re going to check out round two PPP. We’ll look at who qualifies, what’s different about this round of funding, and just how you will get your funds.
Official Guidance For brand new PPP Loans Is Forthcoming
The PPP was initially introduced underneath the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and small businesses could make an application for forgivable loans as much as $10 million starting in April 2022. Unfortunately, though, funding ran out.
The Consolidated Appropriations Act, 2022 has replenished funding, giving businesses another chance to receive COVID relief. It’s important to note, though, that at this moment, the balance was only just signed into law. Additional changes might be forthcoming dads and moms (or perhaps months) to come, and there are still a few unknowns.
Official guidance from the Sba and also the Irs hasn't yet been released. However, we'll always keep this along with other PPP-related content updated at , so you’ll always be in the know. For the time being, though, let’s dive into what we can say for certain, and just what this new bill method for your business.
New PPP Rules According To The Stimulus Bill
The second round of PPP funding looks a bit not the same as the first round. Fortunately, a number of these changes benefit small business owners. Let’s take a look at the major changes for the following round of funding.
- Maximum Borrowing Amount: The very first round of PPP loans were capped at $10 million. For the second round, maximum borrowing limits were lowered to $2 million. (Important note: the cap of $2 million only applies if you're getting a PPP loan for the second time. Should you didn't take out a PPP loan in the first round, you are still eligible underneath the $10 million limit, rather than $2 million.) The maximum borrowing amount is equivalent to 2.Five times the borrower’s average monthly payroll up to $2 million. In case your clients are in the foodservice and/or accommodations industries, the utmost borrowing amount for a second PPP is equal to 3.Five times the borrower’s average monthly payroll as much as $2million. A monetary year or twelve months may be used to calculate the max borrowing amount.
- Businesses Using more than One Location: Businesses using more than one physical location are eligible for funding provided each location doesn't have more than 300 employees.
- 90-Day Waiting Period: Borrowers that received PPP funding within the last 3 months are eligible to try to get the second round of funding. However, the aggregate totals of borrowed funds from the third and fourth round might not exceed $10 million.
- Tax Deductions: Expenses taken care of with PPP funds are tax-deductible.
- Businesses Associated with China: Any publically-traded company or entity affiliated with the People’s Republic of China, including Hong Kong, is ineligible to apply for the 2nd round of PPP funds.
- New & Seasonal Businesses: New business organisations and seasonal businesses are entitled to PPP funding as long as they were in operations prior to February 15, 2022.
- Businesses In Bankruptcy: Businesses currently in bankruptcy may qualify to receive PPP loans.
- Covered Period: The covered period can be any 8- or 24-week period using the end date selected through the borrower.
To be entitled to PPP loan, the next conditions should be met:
- Must have been in operations just before February 15, 2022
- All PPP funds received within the first round should be spent
- Businesses should have a maximum of 300 employees (this problem only pertains to second-time PPP borrowers)
- Businesses must show that there is at least a 25% reduction in gross revenue in 2022 in comparison to the same quarter in 2022 (this condition only pertains to second-time PPP borrowers)
- Must confirm that loan money is essential to support the ongoing operations from the business
Finally, one of the greatest changes is available in terms of how money is spent. To be eligible for a forgiveness within the first round of funding, businesses should have used funds for qualifying payroll costs, lease or mortgage expenses, or utilities. The Consolidated Appropriations Act adds a few additional qualifying costs. As well as the qualifying costs covered throughout the first round of funding, the following expenses will also be forgivable:
- Software & Cloud Computing: Funds could be allocated to business software or cloud computing services which are employed for payroll, inventory, human resources, supply tracking, or record keeping.
- Supplier Costs: Some supplier costs may qualify for loan forgiveness.
- Property Damage: Property damage that was incurred because of looting or riots is really a forgivable cost provided it wasn’t included in property insurance or another type of compensation.
- Personal Protection Equipment: Personal protection equipment purchased for workers as a result of the COVID pandemic is a covered expense.
One last (but very important) thing to note here is that the new bill is available to interpretation, so changes might be forthcoming. New guidance from the SBA and/or the government may help clarify any problems that are unclear. Since it’s so at the start of the procedure, we’re only going with what we know so far. However, we will still provide updated coverage as new guidance is released.
When & The best way to Make an application for PPP Round Two
It’s still early, so exact details on how and when you can make an application for the 2nd round of PPP funding is still in the environment. That doesn’t imply that we’re completely in the dark, though. The balance does state that the deadline for PPP funding is March 31, 2022, however the deadline has since been pushed back to May 31, 2022.
In the meantime, though, some lenders already are gearing up for the next round. Online lenders including Lendio, SmartBiz, Credibly, and BlueVine are gathering information and get yourself ready for the second round of funding. Along with providing a lot of PPP loans, these lenders will also be opening up applications for eligible borrowers.
A number of banks, banking institutions, an internet-based lenders is going to be providing PPP loans. We recommend doing all of your research (including reading our previous posts on the first round of PPP loans) to find out which lenders possess the best processes in place that will help you secure funds easily and quickly.
