Small Business Owners: PPP Eligibility

In 2020 small businesses around the world were stunned by the economic impact of COVID-19. The paycheck protection program (PPP) was created to offer financial relief to small businesses owners, specifically to cover monthly payroll costs, rent, interest and utilities.

During the initial release of the loan “Main Street” struggled gaining access. With the most recent round of PPP, things are different. Companies with less than 500 employees are the focus. This time we’re turning the page to ensure that main street will survive.

PPP is a loan program which requires paperwork and thus seems complicated. Fortunately there are resources available to support small business owners through this process. Cook County COVID 19 Recovery Small Business Assistance is here. Across the county small business owners are encouraged to partner with Business Support Groups to learn more, access capital and thrive.

Most recently a PPP education seminar was held to share knowledge. Here are some of the main takeaways from that event.

Eligibility criteria for First Round of PPP (have not received the loan):
– In operation on February 15, 2020
– Have no more than 500 employees combined with affiliates (unless NAICS 72, 511110 or 5151 then 500 per location)

Eligibility criteria for Second Round of PPP:
– In operation on February 15, 2020
– Have no more than 500 employees combined with affiliates (unless NAICS 72, 511110 or 5151 then 500 per location)
– Funds from first round of PPP have been used completely
– Demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020, Gross receipts for 2019 may be submitted
– Have no more than 300 employees combined with affiliates, (unless NAICS 72, 511110 or 5151 then 500 per location)

Calculating the Loan Amount:

First draw applicants are eligible for 2.5 times the average monthly payroll, up to $10 million.
Second draw applicants are eligible for 2.5 times payroll up to $2 Million.
For businesses in the Accommodations & Services industries (NAICS codes 72) eligibility is 3.5 times the average monthly payroll, up to $2 million.

Loan forgiveness is an added benefit of the PPP loan but proved to be confusing for many small businesses owners in the first round. Fortunately, the criteria is clearer this round. Loan forgiveness varied based on use of the funds.

Eligible business expenses include:
– All payroll costs
– Rent & lease agreements
– Mortgage interest
– Utility payments

Criteria for Loan Forgiveness include:
– Employee and compensation levels are maintained
– A minimum of 60% must have been used on payroll costs*
– Funds must have been used in the 8 – 24 weeks from receiving the loan.

If the loan is not forgiven, the payment terms are 1% over 5 years.

*Payroll costs include expenses that are essential to payroll processes including operational expenses, protective equipment, property damage expenses, supplier expenditures.

Click here for a list of documents you’ll need to apply for the PPP. For one on one assistance in applying for the PPP sign-up here.