Round 3 of PPP
As of January 11th 2021, financial institutions have begun releasing funds as part of Round 3 for the Payment Protection Plan under the CARES Act. Round 2 expired on August 8th, 2020 and $349 billion was dispersed within 2 weeks of the program initiation. Fortunately, Round 3 is finally underway for first and second time drawers. The plan will provide an additional $284 billion to assist with payroll as well as other essential costs for qualifying businesses. Businesses can apply through various partner networks of the SBA, such as our partner’s found here. We’ve compiled some helpful information below regarding the PPP qualifications and requirements.
Who Can Apply?
Businesses that are eligible for Round 3 of PPP are those that met previous eligibility from prior rounds along with some additions. These additions include not for profits (501 (c) and (6), destination marketing organizations (DMOs), housing cooperatives, newspapers, broadcasters, and radio stations. Also included are sole proprietors, Self-employed workers, independent contractors, and gig workers. Additional general requirements are that your business must be operating since Feb. 15, 2020 and a loss of 25% in revenue from a corresponding quarter in 2020/2021 or 2020/2019.
What Can I Use The Funds For?
Much like the previous rounds, funds must be used primarily for payroll and other business expenses. To obtain full forgiveness, borrowers will need to spend at least 60% of loan proceeds funding on qualified payroll expenses. Borrowers may spend up to 40% on other qualified non-payroll expenses, during the covered period. This list of eligible non-payroll expenses has beenexpanded to include:
- Mortgage interest
- Covered operations expenditures
- Covered property damage costs
- Covered supplier costs
- Covered worker protection expenditure
Some Important Takeaways
There are some important distinctions between this round and previous instances. First draw PPP loans are limited to 2.5 times that of average monthly payroll or $10 million. Whichever is the lesser of the two. Second draws are limited to $2 million and are available to those that received funds from Round 1 or Round 2.
The entirety of the loan can be forgiven if the guidelines are followed. This means funds must be used for eligible expenses. You may apply simultaneously for PPP and EIDL loans, there should be no conflict with either. Applications are accepted by any SBA approved lender and the program will last until March 31, 2021. If you’d like to get started, feel free to visit our partner’s portal here or call 732-702-1198 with further questions.