New PPP Loans are Available!

If you are a small business owner, you may have been waiting to see if you are eligible for and if you could receive the new loans. On January 6, 2021, the SBA released the new regulations and authorized institutions to lend through March 31, 2021. There are both first-time and second-draw PPP loans, and each has its own set of regulations.

For the first time applicant, here are some of the things that you may want to know. It can be used for:

  1. Payroll Costs;

  2. Employee Benefits and Leave;

  3. Refinancing a 2020 EIDL Loan;

  4. Property damage from looting and vandalism in 2020;

  5. PPE

  6. Mortgage interest, rent, utility, or interest payments

  7. Business operations (for example payroll services, software, cloud computing, product/service delivery, payroll services.

The full loan forgiveness is only available if at least 60 percent of the loan is for payroll costs. If 60 percent is not used for payroll costs, then the loan forgiveness will be prorated to payroll spending ratios. If this is your first-draw PPP loans can still be up to $10 million but second draw loans are capped at $2 million.

How do you know if you are eligible?

You are eligible for a PPP loan if. you, together with any affiliates (if applicable)are:

“• a small business concern under the applicable revenue-based size standard established by SBA in 13 C.F.R. 121.201 for your industry or under the SBA alternative size standard5 ;

• an independent contractor, eligible self-employed individual, or sole proprietor;

• a business concern, a tax-exempt nonprofit organization described in section 501(c)(3) of the Internal Revenue Code (IRC), a tax-exempt veterans organization described in section 501(c)(19) of the IRC, a Tribal business concern described in section 31(b)(2)(C) of the Small Business Act, and you employ no more than the greater of 500 employees or, if applicable, the size standard in number of employees established by SBA in 13 C.F.R. 121.201;

• a housing cooperative, an eligible section 501(c)(6) organization, or an eligible destination marketing organization6 , that employs no more than 300 employees;

• a news organization that is majority owned or controlled by a NAICS code 511110 or 5151 business or a nonprofit public broadcasting entity with a trade or business under NAICS 511110 or 5151, that employs no more than 500 employees (or, if applicable, the size standard in number of employees established by SBA in 13 C.F.R. 121.201 for your industry) per location; or

• another type of entity specifically provided for by PPP rules (as described below); and ii. you were in operation on February 15, 2020, and either had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC or you were an eligible self-employed individual, independent contractor, or sole proprietorship with no employees.”

Preparing for a PPP Loan Application

All small business owners should start to get their documentation together in order to apply for the loan. Leverage your experts to assist with understanding how to apply and obtain your loan forgiveness. Remember that often these kinds of applications may be confusing and your attorney may be of assistance.

New for Phase 2

You must show Covid-19 Impact: Demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

ABOUT THE AUTHOR: Carolyn Dragseth is an attorney with over 25 years of experience in Contracts, Business, and IP law. She is a member of the National Business Association Leadership Council. She currently resides in Louisiana and is an active member of the Entrepreneurial community. She enjoys writing, horseback riding, and hiking. She can be reached at or 225-888-0015.

This article is not intended to be legal advice, please contact us if you are in need of legal assistance.

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