The U.S. Small Business Administration begins taking applications next week for the new round of forgivable Paycheck Protection Program loans to aid small businesses ailing from the COVID-19 pandemic.
Small businesses that did not receive a PPP loan last year can apply starting Monday. The application process opens Wednesday for businesses that want to seek a second PPP loan.
The stimulus act signed into law just before the end of 2020 allocates $284 billion to a new PPP round. The SBA today announced the launch of the new round after issuing guidance Wednesday.
The new PPP round “is just another bridge to save those small businesses” as vaccines are now getting distributed, Rob Scott, administrator for the SBA’s Great Lakes region, told MiBiz in an interview this week.
“We certainly want to help as many small business owners and save as many jobs out there as possible,” Scott said.
Working through a lender, borrowers can use PPP funding for operating expenses. The new PPP round includes operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
The PPP this time has “a lot more parameters,” Scott said. PPP loans are available to small businesses with 300 or fewer employees and can demonstrate a reduction of at least 25 percent in gross receipts in comparable quarters from 2019 to 2020.
The new PPP round as well has a simpler application for loans of $150,000 or less.
Congress also created special carve outs that include $10 billion for PPP loans for “the smallest of small businesses” and sole proprietors, plus $10 billion for a separate grant program for entertainment venues, Scott said.
Like last spring and summer, success of the new PPP will depend on the participation of lenders, he said.
“The success of it is on the backs of our lenders. If the lenders push the program out it’s going to be successful,” Scott said.
The SBA in the first rounds of the PPP approved 5.2 million loans totaling $525 billion through the end of the program on Aug. 8. In Michigan, more than 128,000 small businesses received PPP loans for $16 billion.
The SBA expects what Scott called a “mixed” and more targeted demand for loans in the new round. Different states have different COVID-19 restrictions in place now, he said, which could affect the type of applicants.
The restaurant and hospitality industries will undoubtedly have the largest demand for aid, Scott said. In the Great Lakes region, Michigan still prohibits indoor dining, while Ohio and Indiana do not.
“It’s very different from before,” Scott said. “Before, everyone needed it because we were completely shut down as a country. Restaurants were shut down, so the demand was astronomical in the first round. In the second round, there is demand there but it’s different. The restaurants in Michigan need it bad.”
In an annual survey the Grand Rapids Area Chamber of Commerce released this week, nearly half of more than 700 members responding said they need financial assistance to remain viable. Nearly a quarter of members responding to the survey said they were “at risk of closing under current conditions within the next 12 months,” according to the Grand Rapids Chamber.
“This information is concerning and shows a huge threat to our economy,” said Andy Johnston, vice president of government affairs at the Grand Rapids Chamber. “These businesses support thousands of families and help make West Michigan a vibrant and attractive community. We are hopeful that these businesses can pull through but know they will need additional assistance to get through the winter.”
Another indication of the economic pain from the pandemic came this morning when the U.S. Department of Labor reported the loss of 140,000 jobs nationwide in December amid a surge in COVID-19 cases.
“The soft headline labor data captured in today’s BLS release is consistent with other signals that the U.S. economy cooled heading into the year end. Economic activity was weighed down by a combination of tightening social mitigation policies by states and cities, and also by the wind down of fiscal support from the CARES ACT (last spring),” Comerica Inc. Economist Robert Dye wrote in an economic alert. “Even though we did get the additional $900 billion of fiscal stimulus at year end, it came too late to help December economic performance.”
News coverage in the small business section of MiBiz is made possible by advertising support from the Small Business Association of Michigan. SBAM is the statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. This advertisement has no effect on editorial consideration in MiBiz.