Paycheck Protection Program coming to an end

Businesses have just under two weeks left to apply for a loan through the Paycheck Protection Program (PPP), a pandemic-related relief option that has recently undergone some program changes to make the system more equitable. The program closes on March 31 for both first and second draw loans.

PPP loans are intended to be a direct incentive for small businesses to keep their workers on payroll and the Small Business Administration (SBA) says the loans will be forgiven if all employee retention criteria are met and the funds are used for eligible expenses.

The loans can be used to help fund payroll costs (including benefits), as well as to pay mortgage interest or rent, utilities, worker protection costs, uninsured property damage costs caused by looting or vandalism during 2020 and certain supplier costs and expenses for operations.

According to the SBA, recent changes announced by President Joe Biden on February 22 include revisions to the funding formula that make it easier for sole proprietors, independent contractors and the self-employed to receive financial support. Small business owners with prior non-fraud felony convictions or student loan debt delinquency are no longer excluded, while non-citizen small business owners may now use their Individual Taxpayer Identification Number to apply.

For business owners who have already applied for a PPP loan, says Andy Miller, President of Sundance State Bank, “2nd Draw PPP loans are typically available to business that already received a first PPP loan and are able to show a 25% Revenue reduction in at least 1 quarter from 2019 to 2020.”

Miller also notes that farm and ranch sole proprietors who file on Sch F of their personal tax returns and sole proprietors or small business owners who file on Sch C of their personal tax returns are now eligible based on gross income, where previously they could only use net profit.

The PPP was established by the CARES Act and is implemented by the SBA with support from the Department of the Treasury. The program provides small businesses with funds to pay for up to eight weeks of payroll costs, including benefits.

According to the SBA, by March 7 a total of 7,555,249 loans had been approved nationwide from 5474 lenders, totaling $687,374,564,619 in support. Of that total, Wyoming businesses have secured 7611 loans for a total of $482.7 million.

The largest category of business that have taken advantage of the program is accommodation and food services at 18%, followed by construction at 13% and professional, scientific and technical services and healthcare and social assistance at 11%.