SBA Extends Paycheck Protection Program: What You Need to KnowBy My Service Depot on Wednesday, July 22, 2020
You now have until August 8, 2020 to apply for funds.
The COVID-19 pandemic has had a substantial impact on businesses both big and small. While most field services received the coveted essential designation, because so many people have struggled financially in recent months, many customers have chosen not to schedule various services until their financial situations improve.
This temporary reduction in demand could potentially make it difficult for field service business owners to keep their employees on the payroll. Fortunately, the U.S. Small Business Administration has responded to these circumstances with the Paycheck Protection Program (PPP).
PPP loans can offer business owners as much as $10 million in assistance. Sometimes, they can also become grants.
Are you a field service business owner struggling to pay your employees? Don’t worry if you haven’t applied for a PPP loan yet. Congress recently approved extending the PPP. You now have until August 8, 2020 to apply. This guide will explain what you need to know about the PPP in general, and how you can take advantage of the program.
Understanding the PPP: Essential Information
You likely have a lot of questions and concerns about PPP loans. For instance, although you may benefit in the short-term from a loan that would help you maintain your workforce, you might also wonder if you’ll have the ability to pay the loan back in the future. Perhaps you don’t want to take that financial risk.
That’s understandable. However, you may not have to worry about this issue if you believe you can trust yourself to use the loan funds responsibly. The SBA will forgive the loan if your use of it meets certain criteria.
Criteria for PPP Loan Forgiveness
If you’d like to apply for a PPP loan, you will want to review the SBA’s official guide regarding loan forgiveness criteria. The short version? The basic criteria for PPP loan forgiveness requires successfully using the funds according to their intended purpose.
That means for employers to qualify for PPP loan forgiveness, they need to maintain their current workforce or quickly rehire employees after receiving the PPP funds. They also can’t reduce salaries. A decline in salaries and/or full-time headcount could lead to a reduction in forgiveness.
The SBA also allows employers to use PPP funds for certain other business expenses to a degree. These include rent, utilities, and interest on mortgages.
Additional Key Info
Ideally, you want to qualify for full PPP loan forgiveness. That said, you should still familiarize yourself with essential information regarding loan terms.
Specifically, PPP loans have a 1% interest rate, and loans issued after June 5 have a 5-year maturity. You don’t need to provide collateral or personal guarantees to qualify for a loan, the government and/or lenders will not charge small businesses fees, and you can defer payments on the loan for six months.
Who can apply for a PPP loan?
Not all businesses will meet the standards necessary for PPP loan eligibility. For a business to qualify for a PPP loan, its size must match the SBA’s definition of a “small” business. Sole proprietors, independent contractors, and self-employed people can also apply.
Applying for a PPP Loan
Again, before you start the process of applying for a PPP loan, you should carefully review all the information the SBA provides online. The SBA offers an abundance of resources that may address any issues or questions you may still have, such as how to calculate loan amounts.
In general, however, you should check the list of lenders participating in the PPP by state. The SBA also recommends checking with your local lender to find out if they’re participating.
Before contacting the lender of your choice to begin the application process, you should also review and complete the PPP borrower application form. It covers all the essential information a lender will typically want you to provide when applying. Once you’ve completed the form, get in touch with a lender to discuss the next steps.
PPP Loans: Helping Field Service Businesses Stay Strong During COVID-19
You rely on your employees to succeed. Unfortunately, due to circumstances beyond your control, you may have found it difficult to keep them on the payroll the past few months. Consider applying for a PPP loan before August 8 if that’s the case. While applying for any loan involves a degree of risk, if you’re confident you’ll use the funds appropriately, this loan can help you maintain a strong workforce during the pandemic.