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~5 minute read

History Between Microbusiness and the PPP

Last spring, the government established the Paycheck Protection Program (“PPP”) as one of the main aid programs for small businesses during the coronavirus pandemic.  In the beginning, PPP loans were available to businesses with fewer than 500 employees.
The money could be used for payroll, health insurance, family/medical leave, and business rent/mortgages and utilities.  Even better, funds spent on payroll, business rent, mortgage interest, and utilities in the 8 weeks after receipt were forgivable AND would not be counted as taxable income by the IRS.
But we all saw the headlines during 2020.
The first $349 billion ran out in two weeks. Then Congress approved another $320 billion last May. But somehow Kanye West and other billionaires received PPP loans while small and microbusinesses, on the other hand – who Congress intended to be at the front of the line – got nothing to help keep their lights on.
And throughout 2020, we heard from our own clients that their applications got stuck in the red tape, that they didn’t have time to battle with their bankers, or even that they didn’t know PPP loans existed.

Microbusiness and PPP Loan Updates

Thankfully, things have started to improve in 2021. More PPP money has gone to actual small businesses, rural businesses, and women- and minority-owned businesses than ever before. But the Biden administration is determined to do more to make sure that small, micro and minority-owned businesses finally get the help they need and unveiled the following PPP updates today:
For the two weeks starting on February 24, only businesses with fewer than 20 employees will be able to apply for forgivable PPP loans.  This includes sole proprietors!

Who Qualifies For This PPP Loan?

$1 billion will be set aside for self-employed people in low- and moderate-income areas. Independent contractors and retailers, this includes you!
The restriction barring business owners with delinquent students loans has been removed. If you are one of the millions of business owners with student loan debt, you are now eligible to apply for a PPP loan.
Non-citizen U.S. residents are now eligible and may use their Individual Taxpayer Identification Number (ITIN) to apply.

How Can You Use the PPP Loan?

So if you are one of the 98% of small businesses with fewer than 20 employees – or if you work for yourself – now is the time to consider a PPP loan to get to the other side of this pandemic to help you cover:
Payroll: Salary/wages, health benefits, medical/family/parental/sick leave
Worker protection costs: Personal protective equipment and property improvements like plastic barriers necessary for Covid compliance
Business rent or mortgage interest: As long as your lease/mortgage was signed before February 15, 2020
Business utilities: Electricity, water, gas, sewage, internet, and telephone services in use before February 15, 2020
Operational costs: Workpoint software like Microsoft Office, accounting software like Quickbooks, specialty software like Adobe, etc.
Property damages: Uninsured property damage caused by looting or vandalism during 2020

Important PPP Loan Updates For Microbusinesses

You will not need to put up collateral – such as your house! – or otherwise personally guarantee your PPP loan.
And once you get the loan, the expenses that you incur over the next 8 to 24 weeks are forgivable as long as you use at least 60% of the money to keep your employees (not independent contractors) on your payroll.  If some or all of the loan is not forgiven, you will need to pay it back at 1% interest over 5 years.
If you run a business with more than 20 employees, don’t worry – you can still apply for a PPP loan starting on March 11. But don’t wait too long!  The program ends for everyone on March 31, 2021.

Learn More

Dunlap Law has spent the last several months creating videos to educate our micro and small business clientele. We are also happy to discuss the PPP in more detail with you. Please get in touch with us today