If you’re a business owner, you’ve probably gone through a range of emotions recently. A few weeks ago, as part of the $2 trillion CARES Act, the Paycheck Protection Program (PPP) was launched to provide $349 billion to help small businesses keep their workers and stay afloat. Your expectations may have risen. But that money ran out more quickly than anticipated – a letdown for many business owners. Now, it’s on to Round 2. Time for higher hopes again?

Here are the details: The first $349 billion was used up in less than two weeks, with some 1.6 million companies securing funding. However, many other businesses failed to get loans, and the program drew controversy as some larger businesses, such as hotel and restaurant chains, were able to access the money. So, in response, Congress just passed a $484 billion package, which, in addition to including more money for hospitals and coronavirus testing, provides $310 billion for the PPP. As was the case with the original PPP, the additional funds are designed to help companies with fewer than 500 employees receive loans from banks, primarily to cover payroll costs. The businesses that do keep their employees and fulfill other requirements will have their loans forgiven.

The new legislation also provides $60 billion in additional funding for the Small Business Administration's Economic Injury Disaster Loan (EIDL) Program, consisting of $50 billion for EIDL loans and $10 billion for emergency grants that allow an eligible business that has applied for an EIDL loan to request an advance of that loan of up to $10,000.

It can be tricky to navigate the PPP process, but you’ll improve your chances of getting a loan if you’re prepared. If you have to go back to gather information, you will delay your loan application – and with a finite amount of money available, any delay could harm your chances of getting a loan.

So, before you file, collect all your paperwork, including your 2019 tax returns, payroll reports, mortgage or rent documents, utility statements and documented proof that the coronavirus pandemic has hurt your business. You’ll also want to make sure your business credit file is current and accurate. You can check your business credit score at any of the major business credit bureaus – Dun & Bradstreet, Experian and Equifax. You might have to pay a fee to access your report directly from one of these bureaus, but you may be able to get the report free by going through Nav, a financial technology company, at www.nav.com.

In any case, don’t wait to apply for a PPP loan. Contact your local Small Business Administrator lender, federally insured depository institution, federally insured credit union or Farm Credit System Institution. If you’re interested in the EIDL program, contact the Small Business Administration directly.

The replenished PPP program may not be the last chance for government help to small businesses – but if you’re like many of your fellow business owners, you can’t afford to wait for what might happen down the line. So, although there are no guarantees, do what you can to explore this new opportunity. It may prove to be a lifeline for your business and a chance to strengthen your financial future.

This article was written by Edward Jones for use by Joe Parlavecchio, CFA, CFP®. Visit https://www.edwardjones.com/joseph-parlavecchio for more information.
 
Edward Jones, Member SIPC
 
 

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