by Karen Friel
The COVID-19 pandemic continues to make its impact known on small businesses, employees and Mountain State residents as a whole. There are many financial relief options available to help businesses remain open and employees to continue to receive their paychecks. The Paycheck Protection Program (PPP) remains by far the largest financial relief program ever endeavored by the United States. And there is still time to apply.
For the average business owner, trying to understand the program and eligibility requirements can seem daunting. The U.S. Small Business Administration’s West Virginia District Office is here to help. We are West Virginians with a total of more than 150 years of federal and financial experience ready to help the Mountain State’s small businesses navigate and understand the different financial relief options available. I want to explain what is available through the Paycheck Protection Program.
PPP offers loans for small businesses to pay operating expenses and to keep employees on payroll. The loan can be forgiven, meaning you won’t have to pay it back, if at least 60% is used for payroll and the remaining 40% for allowable business expenses: Mortgage interest, rent, utilities, COVID worker protection (gloves, masks, screens), uninsured property damage costs caused by looting or vandalism in 2020 and certain supplier costs and expenses for operations.
If not used correctly the loan has a 1% interest rate and a two-year maturity date if received before June 5, 2020, and a five-year maturity date if issued after June 5, 2020. The maturity date is simply the date when the loan is due.
There are two types of PPP loans: First draw and second draw. Businesses that haven’t received a PPP loan before will apply for a first draw loan. Certain businesses that previously received a PPP loan are now eligible to apply for the second draw.
For first draw, you may qualify as a sole proprietor, independent contractor or self-employed; a small business according to SBA’s size standards; certain 501(c) nonprofit organizations, 501(c)(19) veterans’ organizations or tribal business concerns; or any business with a North American Industry Classification (NAICS) beginning with “72” (Accommodations and Food Services) with more than one physical location and employing fewer than 500 per location.
A borrower is generally eligible for a second draw PPP loan if the borrower previously received a first draw and will or has used the full amount for only authorized uses; has no more than 300 employees; and can demonstrate at least a 25% reduction in gross receipts (all revenue in any form received or accrued) between comparable quarters in 2019 and 2020.
While the SBA oversees the program, decisions on whom to lend to and when to submit paperwork is in the hands of approved PPP lenders as prescribed by Congress. The Paycheck Protection Program ends May 31, 2021, or when funds have been exhausted, whichever comes first.
You can first reach out to the lender you do business with to see if they are a guaranteed SBA lender making PPP loans. If they aren’t, don’t worry, SBA Lender Match can help connect you with a lender. You can also view all lenders near you on a map.
Hopefully, this cleared up many questions. Remember, you’re not alone in this journey. The SBA and the SBA resource partners are here to help. Sign up for the SBA email updates at www.sba.gov/updates. These emails will give helpful information and access to SBA West Virginia’s free training webinars and the latest SBA information as it’s released. Visit www.sba.gov/wv for a full list of the trainings, including detailed training on applying for a PPP loan and applying for PPP forgiveness. You can contact our office at wvinfo@sba.gov.
If you need one-on-one counseling, SBA resource partners can assist. Their business coaching services are free and confidential. Visit sba.gov/localassistance, enter your zip code and find the resource partner nearest you. You can also contact the WV Small Business Development Center directly at 888-WVA-SBDC, WV Women’s Business Center at 304-825-5000 and SCORE at 304-347-5463.
Karen Friel is the district director for SBA WV.
