December 30, 2020
As 2021 inches closer, a new Paycheck Protection Program (PPP) aims at helping businesses. And now’s the time to prepare for that opportunity.
The new round of PPP payments will be available to both those who have not received PPP funds in the past and those who previously secured PPP funding. Indeed, the fund allows for a total of $284 billion for initial and “second draw” PPP loans to be doled out in hopes of providing companies the aid they need to stabilize their businesses.
In order to prepare for the second round of PPP, however, there are several things companies must do.
Although it carries the same name as the first program, the second round of PPP is notably different in how it handles the companies that can qualify. Here’s a brief rundown of requirements. If your company doesn’t fit these requirements, you will not be allowed to apply for a second round of PPP:
2. Get your financials and bank account information in order
If you qualify for the second round of PPP, ensure you can prove it. Get your bank account information and other financial statement data ready to show your lender. The sooner your lender can verify your qualification, the sooner you can get access to your funding.
3. Get your payroll information in order
Now’s the time to contact your payroll provider and access your payroll information. That will be used by your lender to determine how much PPP funding you qualify for.
Your maximum loan amount is calculated by multiplying your average monthly payroll in (a) the one-year period prior to the date of your loan or (b) your 2019 calendar year payroll by 2.5X, up to a maximum of $2 million.
4. Develop a gameplan for how you may want to use the funds, while ensuring your use will qualify for forgiveness
To ensure your PPP loan is forgiven, you’ll need to use the funds on a variety of expenses, including payroll, operations expenditures, property damage costs, and supplier costs, among others. Be sure to have a plan for how you will use your funds to maximize forgiveness.
5. Talk to your tax advisor to discuss the plan and how you can capitalize on the PPP opportunity
Before you apply for your loan, discuss your plan and how you can use your PPP funds with your Perlson, LLP advisor. We can ensure you’re maximizing the opportunity and safeguarding your financial position.
6. Apply sooner rather than later to ensure funds are still available and banks have time to process your application
Once you’ve done all that, it’s time to apply. And be sure to move quickly — the sooner you can get your application in, the sooner you’ll be able to get your funds.
New York State has launched a program that aims at helping you secure the funding you need.