The Paycheck Protection Program (PPP) is a forgivable loan to assist small businesses by helping them keep their employees on payroll. If you are a small business with fewer than 500 employees, a sole proprietor, independent contractor, or self-employed, you are eligible to apply for a PPP loan for up to $2M, depending on your company’s finances. The second round of PPP loan applications recently extended their deadlines to May 31st, 2021. This gives small businesses and entrepreneurs additional time to apply. If you are Black, you should especially look into this loan. Requirements have been amended and are more favorable to our communities. We’re sharing the guidelines and encouraging you to apply way before the deadline!
The government learned a lot from the first round PPP loan, particularly regarding minority owned businesses. In December 2020, data from the Paycheck Protection Program illustrated that many minority owners didn’t receive PPP loans until the final weeks of the program, while White business owners secured funding much earlier. The loan was originally designed to help employers keep their staff on payroll, thus excluding non-employee businesses. For round 1 of the program, non-employer firms had to wait a week after the program began in order to apply.
According to the U.S. Black Chambers, of the 2.6M Black owned businesses in America before the pandemic, 2.1M only had owners but no other staff. Application frustration and fatigue is real for minority business owners. In the first round of the program, many Black and Brown businesses applied to multiple banks and faced rejections or even difficulty in just getting an answer from a bank. Ron Busby, president of the U.S. Black Chambers, stated, “Many of our businesses were being turned down in the first and second round of funding. That caused application fatigue and frustration.”
For Round 2, the Biden administration partnered with the Small Business Administration (SBA) to have a 14-day exclusive PPP loan period for small businesses and non-profit organizations with less than 20 employees to apply. Also, with this new round, independent contractors, sole proprietors, and self-employed individuals can receive more financial support. Before, if you had defaulted on your student loans and were in delinquency status, you didn’t have access to the PPP loan program; however, this has changed. And now, you don’t have to be a U.S. Citizen, you can be a U.S. resident with an Individual Taxpayer Identification Number (ITIN) to apply for PPP. These changes by the Biden administration hope to lead to a more equitable distribution of the PPP funds.
If you want to apply, the SBA website is a great place to start. They will help you find and get matched with a lender in your area and identify the right loan for you. They also offer information and help for additional Covid-19 relief help for businesses like the Restaurant Revitalization Fund, Shuttered Venues Grant, and more. However, you should take the time and apply ASAP. As of April 5th, 2021, the SBA has approved almost 4 million PPP loans for about $224B. This means there is only $68B left. This doesn’t include the 190K loans that are in limbo due to application issues. If you are thinking of applying, do so ASAP. If you aren’t sure if you are qualified, check out the SBA website and contact a lender. Sometimes it just takes a little time to help get your business out of the red and back on the road to recovery.