Forgivable COVID loans for Florida businesses are available again. Here’s how to get one
Is your business still struggling because of COVID-19?
Applications are live for a fresh round of Paycheck Protection Program loans worth more than $284 billion for businesses that need help paying their bills. Those who received funds in the first-go-around last year can reapply starting Wednesday if they meet select criteria.
The forgivable loans are backed by the the U.S government and are meant to be an incentive for small businesses to keep their workers on the payroll. The loans are part of the $900 pandemic relief bill Congress passed last month.
Last year, the first round of PPP loans were gone in 13 days, partly because large, publicly traded companies drained the funds. Some of the aid also went to people who shouldn’t have gotten it.
In Florida, there were more than 100 potentially ineligible PPP loans flagged in an analysis of nearly 4.5 million PPP loans of less than $150,000 by the Miami Herald and the nonpartisan Anti-Corruption Data Collective, a nonprofit group of journalists and data scientists researching corruption.
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Another investigation by the Miami Herald and the Anti-Corruption Data Collective, this one on larger PPP loans, also found that Florida accounted for nearly one in four questionable PPP loans nationally.
While the system had its issues, the program helped keep many businesses open, including in South Florida. Now, businesses in need can look to it again.
The application process can be confusing, even if it’s not your first time going through it. Here’s a guide to help you:
What does a PPP loan cover?
A loan through the Paycheck Protection Program covers payroll costs, including benefits like housing stipends; vacation; and parental, family, medical and sick leave. The funds can also be used to cover operating costs, including rent, utilities and personal protective equipment to keep workers safe from COVID-19.
At least 60% of the total loan must be used on payroll expenses if you want the full loan forgiveness. More on that later.
The loan excludes sick and family leave wages that qualify for a refundable tax credit under the Families First Coronavirus Response Act. There is also a $100,000 annual compensation per employee limitation.
Learn more about the exclusions at https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
Who can apply for PPP loans?
Small businesses that have 500 or fewer employees can apply, according to the program’s interim guidelines. This includes veterans organizations, tribal business concerns, sole proprietors, independent contractors and eligible self-employed workers. For the first time, news and some nonprofit organizations will also be eligible for the funds.
If you received a PPP loan last year and want to apply again, you can. The business must have no more than 300 employees and must be able to demonstrate a 25% gross revenue decline in any 2020 quarter compared to the same quarter in 2019. It also must have used or will use the full amount of the previous PPP loan.
Select businesses that have more than 500 employees may be eligible to apply if it meets the definition of a “small business concern” and the SBA’s employee-based or revenue-based size standard corresponding to its industry. To check your industry’s size standard, visit sba.gov/size.
A business does not need to qualify as a “small business concern” to be eligible for the PPP but you must meet other criteria, according to the U.S. Small Business Administration’s PPP FAQ guide. Any business that applies for a PPP loan must be open, though it can be temporarily closed or suspended.
Publicly traded companies, businesses that specialize in politics, lobbying or have extensive dealings with China are excluded from applying for a PPP loan, according to AARP. Concert venues, theaters and museums are also not eligible for the PPP loans, but can apply for special “Shuttered Venue Operator Grants” worth up to $10 million, according to the Tampa Bay Times.
For the full list of eligibility requirements, visit sba.gov, click “Coronavirus Relief Options” under the Funding Programs tab and then click on “Paycheck Protection Program.”
How much can I get?
Like last time, loan amounts will be based on the applicant’s payroll, which can either use 2019 or 2020 figures. Seasonal businesses will use a different calculation.
The maximum loan amount possible is $2 million, less than the previous $10 million cap. If this is the second time your business requests a PPP loan, it’s eligible to borrow an amount equal to 2.5 times its average monthly payroll costs, according to the Wall Street Journal.
Businesses like restaurants and hotels that are classified as “accommodation and food-services industries” by the Small Business Administration are an exception. These businesses were hit hard by the pandemic and are eligible for loans up to 3.5 times their average monthly payroll costs, MarketWatch reports.
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How can I apply for the Paycheck Protection Program? What’s the deadline?
Only loan applications from community financial institutions will be accepted for now to prioritize minority, women and veteran-owned businesses, according to the Small Business Administration.
“Community lenders are specially designed institutions that focus on undeserved borrowers, including women-led businesses and those run by Black, Latino and Asian owners and other minorities,” according to the New York Times. These types of lenders make up around 10% of the SBA’s more than 5,000 lenders.
This means South Florida business owners might get an advantage this time around because of the region’s diverse demographic.
Officials have not said when larger banks, credit unions and lenders will be allowed to start processing loans. Check with your lender to see whether it is participating in the program. You can also find a list of participating lenders by state at sba.gov. The website also has a free online tool that can help connect you with SBA-approved community financial institutions and small lenders.
If this is your second time applying for a PPP loan, you can avoid some paperwork if you use the same lender and payroll figures from 2019, according to MarketWatch.
The deadline to apply for a PPP loan is March 31 or until the program runs out of funds, whichever comes first. PPP loan maturity rate (due date to have the loan paid back in full) is five years.
Can my PPP loan be forgiven? What are the requirements?
PPP loans can be forgiven in full but it will depend, in part, on payroll costs within an 8- to 24-week period, starting from the date your business receives its loan, according to the programs rules.
Remember, at least 60% of the total loan must be used on payroll expenses and no more than 40% can be used for nonpayroll costs (like utilities and rent) if you want the full loan forgiveness, according to the guidelines. Your lender can provide you with the correct form you will need to complete and submit along with supporting documents.
Expenses paid with a PPP loan, even if forgiven, can also be deducted on your business’ 2020 taxes.
To learn more about the program and other resources available to businesses, visit sba.gov.
Miami Herald staff writer Yadira Lopez contributed to this report.