What are new changes in PPP for small business? – by Syed Nishat

What are new changes in PPP for small business? – by Syed Nishat

During the COVID-19 pandemic, the United States government enacted the first round of Paycheck Protection Program (PPP) on March 27, 2020 to provide small businesses with the funds to keep themselves afloat during a very challenging time. These funds can be used to pay rent, employee salaries, mortgages, and utilities. One of the most advantageous facets of PPP loans is that they have the potential of being completely forgiven if certain requirements are met. SBA in conjunction with US Treasury reenacted the second round of PPP on Jan 11, 2021. In order to qualify, businesses must have had a 25% decline in gross revenue in a 2020 quarter compared to the same quarter in 2019.

In addition, to ensure that the PPP loan is not crowed by large institutions, Biden administration on Feb 22, 2021, made some changes in the PPP loan to target small business such as barbershop, small flower stores, cleaning service etc. that are affected very hardly during COVID-19. The aim is to help small businesses with fewer than 20 employees; sole proprietor and also to make it easier for small business to obtain the loan and remove certain restrictions that prohibited them to get the loans in the first two rounds.

• Previously, if a business owner had a non-fraud felony conviction or student loan default, they were excluded from applying for the PPP loans.
• Secondly, when applying for the PPP loan, business owners can use the gross income (not net income like before) to apply for the 2.5 times loan amount. Lastly, the new loan is available to non us citizens like green card holders or resident aliens.
• The process to apply for the loan is same as last time; you find a local bank/lender who participant in the program and supply necessary documentation such as profit loss statement, and business formation proof and they underwrite the process with SBA and will let you know an update.
• The banks are still waiting for hear for further guidance from US treasury and will have more clarity in the next few days. The window for apply for this loan is for 14 days starting February 24, 2021.

Syed Nishat, BFA, is a partner at Wall Street Alliance Group. He holds a bachelor’s degree in business administration from University of Nevada Reno. Syed holds the FINRA Series 7, FINRA Series 63 and FINRA Series 66 licenses, along with licenses for life, disability and long-term care insurance. He also has been awarded the Behavioral Financial Advisor (BFA) designation.