4 Things South Florida Businesses Should Know When Applying for a Paycheck Protection Program Loan

Article provided by TD Bank

[SOUTH FLORIDA] – Last year, the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) was created by Congress and further enhanced in December 2020. PPP loans assist with the payment of payroll costs, rent, utilities and more. Loans specifically for businesses that were established before Feb. 15, 2020. And, have not permanently closed, and can be used for first time (“First Draw”, no previous PPP loan) or second time (“Second Draw”, previous PPP loan) borrowers.

Funds have been set aside to especially help eligible borrowers in low-income to moderate-income neighborhoods. And, eligible borrowers with a maximum of 10 employees access PPP funds. This is positive news for Florida small businesses, many of which are Black or Latinx owned.

So far, more than 713,027 Florida businesses have received $45.5 billion in PPP funding. However, despite these numbers, a Federal Reserve survey conducted during the pandemic found that U.S. minority-owned businesses were more concerned than white-owned businesses about their ability to access credit, and a PPP loan could help close that gap.

Applying for a PPP Loan

Business owners who are still thinking about applying for a PPP loan should consider these four points:

1.    Time is of the essence

The PPP Extension Act of 2021 renewed the PPP through May 31 – or until funds run out. However, it may take a lender several days to review and process your loan and the SBA to send the funds. So, don’t wait until the last minute to submit an application.

Once a business owner receives their PPP funds, a new clock starts ticking: the PPP covered period. The covered period is the time a borrower has to spend the full amount of their PPP loan. Additionally, it is the borrower’s choice of any time between eight and 24 weeks. After the covered period ends, the borrower has until their loan maturity date (the date that the final payment of the loan is due) to apply for forgiveness. Loan payments will begin 10 months after the end of the covered period. Unless, the borrower submits a forgiveness application before the 10 months are up. And, receives a decision of less than full forgiveness. No payments need to be made on fully forgiven loans.

2.     Use free resources

SCORE (org) is an independent, free resource that supports small business owners and offers guides on the PPP application, a PPP loan calculator and more. The SBA (sba.gov) also has hundreds of pages of FAQs on related topics from what documents are needed to apply for a PPP loan to how nonprofits should list “ownership” on their PPP application.

3.    Sole proprietors and contractors qualify, too

Many freelancers, contractors and “gig workers” have been significantly affected by COVID-19. Whether from slower demand for work because companies are watching expenses. Or, consumers putting the brakes on services like ride shares due to health concerns. The good news is that the SBA allows solo entrepreneurs to use a PPP loan to protect a single paycheck – your own. As long as you can provide the required documents to show income records.

4.    If used properly, a PPP loan essentially becomes a grant

The SBA states that PPP funds can be used only for certain expenses related to owning and operating a business. As long as a business spends the funds appropriately and can provide documentation to show that’s how the money was used, a PPP loan could be fully forgiven, meaning you don’t owe anything back on the loan. This time around, more expenses are eligible for forgiveness, including payroll and benefits (must make up 60% of how the loan is spent), mortgage interest/rent, utilities, business software or computing-service costs, essential supplier costs, expenditures for employee and customer safety (such as PPE) and property damage resulting from 2020 unrest.

How to Start a PPP Loan Application

To get started on a PPP loan application, contact an SBA Preferred Lender such as TD Bank or use the SBA’s Lender Match program to apply through a Community Financial Institution (CFI).