Congress passed another stimulus package, which includes the next wave of Paycheck Protection Program (PPP) loans.  At Perception Capital we are eager to participate in PPP Round 3 for 2021 and continue our mission of helping small businesses.  Read below what we know about the new program guidelines for second draw PPP loans and potential changes to loan forgiveness.  Use our expedited application process, by clicking the link below. 

Apply Now for PPP

Here’s what we know: 

• The $900 billion COVID-19 aid bill includes a $284 billion allocation for Initial and “Second Draw” PPP loans.

• Small businesses that received an Initial PPP loan may qualify for a Second PPP loan (Second Draw).

  • To be eligible to apply for a Second Draw PPP loan, entities must employ 300 or fewer employees and must have used (or will use) the full amount of their first PPP loan prior to applying for a Second Draw.

  • Eligible businesses must also demonstrate at least a 25% reduction in gross receipts in the first, second, third, or fourth quarter of 2020 relative to the same quarter from 2019. 

  • A business that was not in operation on February 15, 2020 is not eligible for an Initial PPP loan or a Second Draw PPP loan.

• The new PPP legislation includes changes to forgiveness—including a simplified forgiveness process for borrowers with loans under $150,000—and expanded expenses that are eligible for forgiveness.

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The benefit of working with Perception is instant access to our SBA platform supported by its automated lending platform, secure file technology, and a state-of-the-art SBA referral system

 

What Is The Paycheck Protection Program?

The Paycheck Protection Program (PPP) is a loan designed to provide direct incentive for small businesses to keep their workers on payroll.  Due to the lesser requirements for PPP loans, more people will qualify for this loan compared to previous SBA loans.

MAXIMUM LOAN AMOUNT

$2 Million

LOAN TERM

Up to 5 Years

INTEREST RATE

1% Fixed APR - Forgivable if used correctly

GUARANTEE

None Required

PROS

• Long Payment Term of 5 Years

• 1% Fixed APR which is Forgivable

• Suitable for payroll and utility expenses

• No Personal Guarantee or Collateral

   CONS

• First Round of PPP Funding Ran Out Quickly

• SBA Banks Are Overwhelmed with Applications

• Funding Speed Depends on SBA Bank or Lender

The Paycheck Protection Plan (PPP) will forgive the debt used for payroll costs, mortgage interest, rent and utility payments!

 

Paycheck Protection Program (PPP)

PPP Round 3 & PPP Second Draw

Program Overview

The Paycheck Protection Program is a loan designed to provide a way for small businesses owners to re-hire and to keep their workers on payroll, as well as have working capital to cover utility and rent related expenses.

SBA will forgive loans if all employees are kept on the payroll for eight to twenty-four weeks and the money is used for payroll, rent, mortgage interest, utilities, or other expenses.  

Who Can Apply

The requirements are very simple.  

• Your business or non-profit must have been in operation as of February 15, 2020.  

• Publicly traded companies are no longer eligible to apply.

For first time PPP recipients:

• You must be a small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

For a “Second Draw” PPP Loan:

• You must be a small business with less than 300 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

• You must show a 25% reduction in revenue in any quarter of 2020 in comparison to the same quarter from 2019

• Entities must have used (or will use) the full amount of their first PPP loan prior to applying for a Second Draw

Businesses in certain industries may have more than 300 employees if they meet the SBA’s size standards for those industries.  For first time “initial” PPP loans, the number or employees are capped at 500.

Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 300 workers. This means each store location could be eligible.

How to Apply

You can apply through Perception Capital and it’s SBA Approved & Trusted Lenders. 

The SBA will begin processing loan applications in early January 2021.

Loan Use

PPP Loans will help small businesses, including sole proprietors, private non-profits and independent contractors to maintain their payroll and expenses.  Below is a list of what the allowable uses of the loan are: 

• Payroll Costs: Salaries, Wages, Commissions, Cash Tip Payments (or similar compensation)

• Mortgage:  Interest payments on your Mortgage bill (not mortgage principal)

• Rent

• Utilities: Electric, Gas + Heat, Cable + Internet

• Healthcare:  Any costs that are related to continuing a groups healthcare benefits, including insurance premiums

• Interest on any other debt related obligations sustained before February 15, 2020

Additional eligible expenses have been included in this iteration of PPP Second Draw and PPP Round 3 (PPPr3):

• Certain operation expenditures including business software and cloud computing products and services; the tracking and processing of payroll expenses; costs related to human resources, sales, and billing; or the tracking and accounting of records, expenses, supplies, and inventory

• Property damage related to public disturbances not otherwise covered by insurance or any other form of compensation

• Expenses related to protecting workers such as PPE purchases or modifications/renovations made to comply with federal, state, or local guidance issued in relation to the pandemic.

• Costs owed to suppliers for essential goods purchased prior to receiving your latest PPP loan or perishable goods purchased before or during the “covered period” of the loan.

  • The “PPP covered period” is determined by the borrower and must be between 8 and 24 weeks of receiving the PPP loan.

Loan Details 

The Paycheck Protection Program is calculated based on 2.5 X your business’s monthly payroll costs. These payroll costs used to calculate your loan amount are listed above (Loan Use) along with additional payroll related costs like state and local taxes on your payroll, paid leave or payment for vacation, group healthcare payments, retirement payments, and allowances for separation or dismissal.  

 

For businesses in the hospitality and restaurant industries, the loan can be calculated based on 3.5 X your business’s monthly payroll costs.  The difference in loan size reflects the emphasis put on helping restaurants and hotels that have been hit especially hard by the pandemic and employ many workers who are struggling to make ends meet.

 

Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

 

The maximum loan amount was reduced to $2Million on PPPr3.  This loan has a maturity of 5 years and an interest rate of 1%.

 

PPP Deductible Expenses

This round of PPP contains an adjustment to the program that is extremely advantageous for business owners:  expenses paid with PPP funds are tax deductible.  This is a reversal from initial guidance that disallowed the deductibility of expenses covered by a forgiven loan.  Advocacy from the business community now allows what critics have called “double-dipping” and makes the PPP program much more beneficial for businesses when they determine their 2020 tax bill.

 

PPP Loan Forgiveness

The PPP Round 3 (PPPr3) is eligible to be fully forgiven if the funds are used correctly. 

This means if the funds are used for payroll costs (listed above), interest on mortgage payments (not principal), rent, and utilities.  

For PPP loans distributed in round 3 to be forgiven, 60% of proceeds must be used towards payroll. As in round 1, rent and utilities are also eligible expenses. Additional eligible expenses have been included in this iteration of PPP (see above).

There is also a new, simplified process for the forgiveness of loans $150,000 and under. The SBA currently has until January 20, 2021 to provide a one-page certification form to be completed by the borrower at any time before the loan matures. It is recommended to complete the form within 10 months after the covered period of your loan ends because that is when monthly payments begin on any PPP funds that are not forgiven.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

To apply for loan forgiveness, a borrower must submit certified documents from a representative of the business to verify payments used for payroll (number of employees, pay rates, including IRS payroll tax filings and state income, payroll, and unemployment insurance filings) and expenses (mortgage interest, rent and utilities).

If you wish to begin preparing your application, you can click the link below to start the application or reach out to one of our funding advisors at (844) 475-5551 or email info@perceptioncapital.net

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Can you get a PPP Loan if you have Other Loans?

Yes, you can apply for many types of other loans alongside a PPP loan.  Even if you have existing loans in place, you can still apply.  If you already received a PPP loan, you are eligible to apply for a “Second Draw” if you meet the requirements mentioned above.   You are also eligible to apply for the EIDL loan.  You can’t use the funds from a PPP loan for the same use as another loan.  If you have any questions, call your Perception advisor today @ (844) 475-5551

Other Relief Loans Available from Upwise

EIDL Emergency Advance

The EIDL Emergency Advance allows quick funds for small businesses whose revenue decreased from COVID-19. 

SBA Express Disaster Bridge Loan (EBL)

The SBA Express Bridge Loan allows small businesses affected by coronavirus to access up to $25,000 with less paperwork. 

Economic Injury Disaster Loan (EIDL)

The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million. 

SBA 7(a)

Relief Loan

The SBA 7(a) Loan can help businesses respond to opportunities and challenges associated with COVID-19.

What does this Aid Bill mean for Small Business?

For many small business owners this relief could not come fast enough.  The SBA has never been tasked with disaster relief of this scope, so EIDL Loan guarantees will be distributed through the 7(a) loan program.  

At Perception Capital, we have many years of experience working with trusted + approved SBA Lenders in which our funding advisors are trained to walk you through every step of the way.  We handle all the paperwork and filing on your behalf, so you can get back to the more important things, like running your business. 

We advise business owners to take advantage of ALL of the SBA Relief Programs available:  

The PPP will cover your Payroll & Overhead Expenses – and if used correctly – will be forgiven – meaning you do not have to pay it back.  This is a no brainer – Thanks U.S. Government!

The EBL can get you up to $25K to act as a bridge loan while applying and waiting for the EIDL to go through, which could take some time, considering how flooded the SBA is right now, so get your application in now – for this one. 

EIDL can get you up to $2M at the cheapest interest rate but will be the hardest to get approved for.  We expect more businesses to be approved for the EIDL Emergency Advance

The SBA 7(a) is always the gold standard of business loans and is offering a Disaster Relief Program! 

Business owners should know that they can get a traditional SBA 7(a) Loan for business growth and expansion alongside an EIDL Loan, which may have interest forgiveness in the future. 

It also appears that small businesses will be able to defer their payroll taxes until 2021 or 2022.  A separate program will provide $17 billion to pay the principal, interest, and fees on outstanding SBA loans temporarily.  There are roughly $100 Billion of these SBA Loans Outstanding. If you have an SBA Loan call your SBA lender or Perception advisor today @ (844) 475-5551

Types of SBA Loans

Paycheck Protection Program (PPP)

SBA Express Bridge

Economic Injury Disaster Loan (EIDL)

SBA Type 7(A) Standard

SBA Type 7(A) Small

SBA Express

SBA 504 Loan

Export Express

Export Working Capital

International Trade

Overview: The PPP is a loan designed to provide direct incentive for small businesses to keep their workers on payroll.

 

Forgiveness: SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

 

Guarantee: No collateral or personal guarantees are required.

 

Terms: This loan has a maturity of 2 years and an interest rate of 1%.

 

Who Can Apply:  Any small business with less than 500 employees per location. 

 

When: Enrollment starts April 3, 2020 – get your Application in now! 

Overview: The SBA Express Bridge Loan allows small businesses to access up to $25,000 with less paperwork. 

 

Forgiveness: If applying for an EIDL Loan and need quick capital – this will be repaid in full or in part by proceeds from the EIDL Loan.

 

Guarantee: No collateral or personal guarantees are required.

 

Terms: Structured as a term loan to amortize over a maximum term of 7 years. Interest Rate: Prime + 6.5% max.

 

Who Can Apply: Any small business located in any state, territory and the District of Columbia that have been adversely impacted by the COVID19 emergency.

 

When: Enrollment starts April 3, 2020 – get your Application in now!

Overview:  The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital up to $2 Million, with a quick emergency advance up to $10K. 

 

Forgiveness: The EIDL Emergency Advance is eligible to be forgiven and converted to a grant.  The EIDL Loan Needs to be paid back.

 

Guarantee: Loans may require personal guarantee or collateral over $200K.

 

Who Can Apply: Small businesses, sole proprietors, independent contractors, small agricultural cooperatives, Tribal businesses, small aquaculture businesses, and most private non-profit organizations including faith-based organizations.

 

When: Enrollment starts Now – get your Application in now!

Maximum Loan Amount:  $10 Million

Maximum SBA Guarantee: 90% for loans up to $150,000 and 75% for loans greater than $150,000

Interest Rate:  Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum

Eligibility Decision:  By the SBA. Qualified lenders may be granted delegated authority (PLP) to make eligibility determinations without SBA review.

Revolving Lines of Credit:  Up to 10 years (Permitted only under CAPLines submission. See below)

SBA Turn Around Time: 5-10 business days

Forms: SBA Form 1919 and SBA Form 1920 are required for every loan (other SBA Forms may be required)

Collateral:  Lenders are not required to take collateral for loans up to $25,000. For loans in excess of $350,000, the SBA requires that the lender collateralize the loan to the maximum extent possible up to the loan amount. If business fixed assets do not “fully secure” the loan the lender may include trading assets (using 10% of current book value for the calculation), and must take available equity in the personal real estate (residential and investment) of the principals as collateral.

Credit Decision:  By the SBA. Qualified lenders may be granted delegated authority (PLP) to make credit decisions without SBA review.

Maximum Loan Amount:  $350K

Maximum SBA Guarantee: 85% for loans up to $150,000 and 75% for loans greater than $150,000

Interest Rate:  Lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum

Eligibility Decision:  By the SBA. Qualified lenders may be granted delegated authority (PLP) to make eligibility determinations without SBA review.

SBA Turn Around Time: 5-10 business days

Forms: SBA Form 1919 and SBA Form 1920 are required for every loan (other SBA Forms may be required)

Collateral:  Lenders are not required to take collateral for loans up to $25,000. For loans over $25,000, up to and including $350,000, the lender must follow the collateral policies and procedures that it has established and implemented for its similarly-sized non-SBA-guaranteed commercial loans, but at a minimum the lender must take a first lien on assets financed with loan proceeds and lender must take a lien on all of the applicant’s fixed assets including real estate. Lender is not required to take a lien against applicant’s real estate when the equity is less than 25% of the fair market value. The lender may limit the lien taken against real estate to the loan amount.

Credit Decision:  By the SBA. Qualified lenders may be granted delegated authority (PLP) to make credit decisions without SBA review.