Small carpentry businesses could benefit from new PPP lending rules
Small carpentry businesses should not overlook a special opportunity to apply for loans from the just announced Paycheck Protection Program.
In new rules announced on February 22 by the federal government, a special two-week period has been set aside from February 24, 2021, for the Small Business Administration to only accept PPP loan applications from businesses under the age of 20. employees.
PPP loans are designed to help businesses affected by the COVID-19 pandemic meet their expenses, especially salary expenses, and the loans can also be repayable up to 100%. SBA handles the approval process, but all requests are handled by the banks.
Hannah Smolinksi, a financial advisor working with Upside Financial, strongly recommended that all small businesses consider applying for the current round of PPP loans. “Don’t leave money on the table that you could use,” she told a recent webinar.
She noted that the first round of PPP loans was treated strictly as a first-come, first-served program, and many smaller, minority-owned businesses were left out. She said this new cycle is designed to compensate for that. Scott Case, CEO of Upside Financial, noted that even sole proprietorships may qualify. The new program offers increased loan amounts for sole proprietors and independent contractors while removing restrictions on things such as student loan debt.
While 98% of small businesses employ less than 20 people, they have so far obtained only 45% of PPP loans, according to the SBA. Case said changes to the program make it “more accessible” for small businesses and sole proprietorships. He said 90 percent of minority and women-owned businesses were taken out of the first round of PPP loans.
Smolinski recommended that small businesses and sole proprietors look into the program. She warned that companies must have been profitable in 2019 or 2020 and must show that they suffered a significant quarterly loss compared to the previous year.
At least 60% of the PPP loan funds are supposed to be allocated to the payroll, and this can include the owner’s salary. For sole proprietors, Smolinski said the payment is based on your bottom line as shown on your tax return on line 31 of Schedule C. In addition to payroll, P3 loans can be partially used to cover other business expenses such as rent, utilities and the costs of personal protective equipment in the event of a pandemic.
To apply through a bank, you can contact a bank with which you already have a relationship, but this is not necessary. The program is also not limited to physical banks and includes online lenders. “PayPal is one of the biggest lenders in the program,” she said.
For most banks, applicants will be directed to an online portal for applications. Smolinski emphasized that you need to have your business income and tax documents in order. Upside Financial, which helps businesses through the PPP loan process, including application and remission, presented an online webinar on the process, which you can watch below.