How to Navigate the Latest Small Business Assistance Plan and Get a P3 Loan

Round	Legislation	Funding	Expiry
1	CARES Law	$ 349 billion	April 16, 2020
2	PPP and Law on the Improvement of Health Care	310 billion dollars	August 8, 2020
3	Consolidated Appropriations Act of 2021	$ 284 billion	March 31, 2021
4	American Rescue Plan Act of 2021	$ 7 billion	May 31, 2021

^{Sources: HR 748, HR 266, RH 133 HR 1319}

The Round 3 PPP funding contained in the AAF, includes significant changes to the Paycheck Protection Program Flexibility Act, 2020, which also made significant changes to the original paycheck protection program that was part of the CARES Act.

the new legislation, for example, extends the permitted uses of PPP funds beyond payroll, covered utilities, and covered rent. It offers flexibility in choosing the period covered for your loan (8 to 24 weeks or until June 30, 2021, whichever comes first) and simplifies the waiver process for loans of $ 150,000 or less.

Contracts reserved for minority-owned businesses, underserved people, veterans and women

In order to secure more funds for small businesses excluded from previous PPP funding rounds, Congress set aside additional funds and a “front-line” application process for minority and other underserved businesses as part of the program. the structure of the CAA, 2021.

• $ 15 billion through community financial institutions;
• $ 15 billion through insured deposit institutions, credit unions, and agricultural credit system institutions with consolidated assets of less than $ 10 billion;
• $ 35 billion for new first-draw PPP borrowers; and
• $ 15 billion and $ 25 billion for first and second draw PPP loans, respectively, for borrowers with 10 or fewer employees or for loans under $ 250,000 to borrowers in low- and moderate-income neighborhoods.

CAA further predicts that at least 25% of each fallow will go to each of the targeted groups:

• SMEs with a maximum of 10 employees; and
• Loans of less than $ 250,000 to businesses in low- and moderate-income neighborhoods.

First and second draw PPP loans

The reopening of the Paycheck Protection Program (PPP) on January 11, 2021, included the creation of two levels of PPP First-Draw and Second-Draw loans.

Generally speaking, first draw loans are for those who have never received a PPP loan, although there are exceptions listed below under eligibility. Second Draw Loans are for those who received a PPP loan under previous funding and now need more funds to stay in business.

First-draw PPP loan details

The Paycheck Protection Program (P3) First Draw Loan is designed to help small businesses keep employees on their payroll. You can use First Draw’s PPP funds on payroll, employee benefits, mortgage interest, rent, utilities, COVID-19 worker protection, uninsured property damage, and certain operating costs and supplier.

Your loan will be forfeited if you meet employee retention criteria and use the money for qualifying expenses. First-draw PPP loans:

• Have an interest rate of 1%
• Have a five-year maturity
• Allow you to defer payments, provided you request a forgiveness, until the SBA remits your loan forgiveness amount to your lender
• Allow you to defer payments for 10 months after the end of the period covered for your loan if you do not request a forgiveness
• Do not require any guarantee and no personal guarantee
• Have no fees

The maximum loan amount for a First Draw P3 Loan is 2.5 times your average monthly salary costs in 2019 or 2020 up to $ 10 million.

First drawdown PPP loan eligibility

If your business has been affected by COVID-19, you may be eligible for a First Draw P3 Loan if you did not receive a P3 Loan under one of the first two funding programs and you are:

• A sole proprietor, an independent contractor or a self-employed person
• A small business that meets SBA size standards (either industry size standard or alternative size standard)
• A business, 501 (c) (3) nonprofit, 501 (c) (19) veterans organization, or Small Business (sec. 31 (b) (2) (C) Act) with 500 or less employees OR
• Which meets SBA industry size standard if over 500
• A business with a NAICS code that begins with 72 (accommodation and food services) that has more than one physical location and employs less than 500 people per location

If you received a PPP loan under previous funding but did not receive a loan forgiveness by December 27, 2020, you can:

• Re-apply for a first-draw PPP loan if you have already returned some or all of your first-draw PPP loan funds, or
• In certain circumstances, you can request a change in the amount of your First Draw-PPP Loan if you have not previously accepted the full amount to which you were entitled.

Ineligible entities

Businesses or organizations that are not eligible for a first draw PPP loan include:se

• Companies primarily engaged in lobbying
• Companies 20% or more owned by China
• Companies with a board of directors resident in China
• Entities benefiting from a closed site operator (SVO) grant under Article 24 of the new law
• Listed companies
• Businesses are not normally eligible under SBA guidelines unless expressly permitted by the new law

Second draw PPP loan details

The loan conditions for a second draw loan are the same as for a PPP first draw loan. Second Draw Loans are for borrowers who have already received a PPP loan under previous financing and who meet the eligibility conditions listed below.

Second-draw PPP loans can be used for payroll, employee benefits, mortgage interest, rent, utilities, COVID-19 worker protection, uninsured property damage costs, certain vendor costs and operating expenses.

The maximum loan amount for a second draw P3 loan is 2.5 times your average monthly salary costs in 2019 or 2020 up to $ 2 million. If you’re in the accommodation and food business, you can borrow 3.5 times your average monthly payroll, still capped at $ 2 million.

Eligibility for the second-draw PPP loan

A borrower is generally eligible for a second-draw PPP loan if they:

• Previously received a first draw PPP loan and will use or have used the full amount only for authorized uses
• Has no more than 300 employees; and
• Can demonstrate a reduction of at least 25% in gross revenue between comparable quarters in 2019 and 2020sese

First and Second Drawdown PPP Loan Application Process

As noted above, first and second draw PPP loan applications will be accepted by all SBA approved lenders until May 31, 2021. Lenders have until June 30, 2021 to process the loans.

There are two things you need to do:

1. Download and complete the First print of 5 pages loan application or Second edition of 6 pages candidacy of the ASB website; and
2. Contact an SBA approved lender and apply.

Keep in mind that first-time PPP loans are generally reserved for companies that have never received a PPP loan in the past, with the exceptions noted in the eligibility section. Second Draw Loans are for those who received a PPP loan earlier.

If you need help finding an approved lender, the SBA provides a Lender Match Tool or you can check the List of PPP lenders, organized by state.

Collect payroll and records

Whether you are applying for a loan in the first or second drawdown, you will need payroll and other records to complete the application:

• Relevant tax declarations (2019 and 2020)
• Payroll records to help verify the amount you are claiming
• Documentation showing the legal structure of your business
• A demonstration of the impact of COVID-19 on your business

Apply as soon as possible

Although legislation requires that Series 3 PPP loan applications be accepted by May 31, 2021, past experience suggests that the actual availability of funds may be much less. Remember that the first round of financing only lasted two weeks.