7 Common questions about the PPP and accessing this second round of funding

This week, a $484 billion relief bill made its way through Capitol Hill, including a second round of funding for the tapped-out and oft-criticized Payroll Protection Program. Earmarked for small businesses with less than 100 employees through the Small Business Administration, at least $320 billion be opened up for this next round of aid, which was quickly curtailed earlier in April after the funds were depleted.

So far, the only constants with the PPP have been confusion, uncertainty, and even criticism, so we wanted to answer seven of the most common questions you may have about the PPP and accessing this second round of funding.

  1. How long should it take to get my loan approved?

There is no set time or guideline, as some applicants see approvals in hours while others wait weeks and weeks for any word. It’s widely reported that big banks are the worst offenders with long wait times, and smaller banks, credit unions, and community banks may offer faster service.

  1. Why are these applications often taking so long?

With the first round of PPP funding, banks and the SBA received more than 1.6 million applications from small businesses. They don’t have the systems or capacity to handle all of those, so they were completely overwhelmed. Hopefully, there are more protocols in place now to speed up the process with round two.

  1. I applied during the first round of PPP funding and never heard back. Do I need to apply again for this second round?

No – the good news is that your application is already submitted so you’re in line already. In fact, your application may be towards the front of the queue if it was submitted weeks ago.

  1. If I’m a business owner and I don’t quite hit the 75% payroll threshold, can I give out bonuses or pay raises just to qualify?

Yes, that’s actually perfectly legitimate as long as no single worker earns more than $100,000 per year. But you CANNOT count independent contractors towards that 75% payroll threshold.

  1. Once I get my PPP loan, can I use the money retroactively to pay for past wages or costs?

According to SBA guidelines, the loan should go towards future payroll and costs, not to pay past obligations (at least for accounting purposes).

  1. I live in a high-cost state or area like Miami or New York. Does the PPP make any adjustment for our sky-high rent and lease prices when calculating the 75% threshold?

No, there are no adjustments or considerations for higher-cost areas or other factors like high cash-flow businesses in those areas.

  1. I’m self-employed or an independent contractor – can I still apply for a PPP loan?

Absolutely, as the PPP has provisions for both independent contractors and self-employed business people to apply. However, you may be at a disadvantage since the window to apply didn’t start until April 10th, a week after other business owners could apply.

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If you have questions about this or need help getting your financial records up-to-date to apply for the second round of the PPP loans, click here to schedule a call.