The Paycheck Protection Program has helped fund loans for over 5.2 million small businesses across the United States in the last year. That number is set to rise as another round of funding for the Paycheck Protection Program has been approved by Congress.
$284 billion has been allocated to fund small business loans. Shelley Brown, a lender relations specialist for the Small Business Administration, says the priority is to focus on businesses most impacted by the pandemic—especially those that have not received previous help from the Paycheck Protection Program.
“Congress intended this round of PPP to increase access to the COVID relief funding for the hardest hit small businesses,” Brown said. “And those are the underserved segments, including women, minorities and veterans. In response, the SBA is initially opening the PPP application to submissions from community financial institutions, which serve underserved communities.”
Over 22,000 small business loans have already been approved in previous rounds of PPP funding in New Mexico, totaling approximately 2.2 billion dollars. The program has been expanded to cover additional expenses such as operational and supplier costs as well as property damage.
Eligibility requirements have also changed to include housing cooperatives, destination marketing organizations, select 501(c)(6) organizations like the Chamber of Commerce and eligible news entities.
Another change is an increased focus on small lenders in this round of PPP, according to the New Mexico District Director of the U.S. Small Business Administration, John Garcia.
“What the SBA and Treasury did is give them a shot at the $284 billion available first, because many of them are located in rural areas, economically depressed areas,” Garcia said. “It allows the mom-and-pop shops, the smaller businesses, that may not go after a larger loan, but it allows them the opportunity to get first in line on that. That's why this is a game changer.”
Borrowers who have already benefited from a previous loan are still eligible to apply for a Second Draw PPP Loan, permitted the business has 300 employees or less and can show a 25% reduction in gross receipts. SBA Lender Relations Specialist Shelley Brown outlined the maximum loan amount small businesses can expect.
“For most borrowers, the maximum loan amount of the second drop is 2.5 average monthly payroll costs up to $2 million,” Brown said. “And then borrowers in the accommodations and food services…the maximum loan amount for the second drop is 3.5 the average monthly amount.”
She also highlighted how businesses can qualify for loan forgiveness.
“The magic number on all of these loans, first draw and second draw, is 60% use for payroll,” Brown said. “So as long as you show that you’ve used 60%, for payroll or more and then 40% or less for qualified expenses when you apply for forgiveness, you have that information, your loan could be forgiven at 100%. So that’s the magic number, 60%.”
Small businesses looking to apply for PPP funding can take advantage of the SBA’s Lender Match Program to find eligible lenders in their area.
PPP applications must be submitted by March 31, 2021.
