Many small businesses can apply for second PPP loans on Jan. 11

Coronavirus

HONOLULU (KHON2) — Some already-struggling businesses are concerned that more restrictions could be put into place as new COVID-19 cases remain in the triple digits in Hawaii. ProService Hawaii has been organizing information for Hawaii businesses as a new round of the Paycheck Protection Program (PPP) is coming with the new COVID-relief stimulus bill.

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This round — like the first — will be in the form of forgivable loans to small businesses, but there are some key eligibility differences.  

“This year’s round of PPP, they’re really trying to make sure they’re targeting those that for whatever reason, missed out on the first round,” explained Michelle Kim Stone, Corporate Counsel & Director of Legal Operations for ProService Hawaii.

Bars, gyms, and other small businesses hit hard by shutdowns, restrictions or tier systems will also have an advantage this time around.

Second-time PPP businesses with a North American Industry Classification System (NAICS) code that begins with 72 will have a maximum $2 million cap or can use up to three-and-a-half times their monthly average payroll to come up with their maximum amount.

“Whereas if you don’t have an NAICS code of 72, you go with the first rules which is two and a half times your monthly payroll up to $2 million,” Kim-Stone said.

She said, first-time borrowers should refer to last year’s rules and will be eligible for the maximum $10 million amount and they also need to have less than 500 employees.

Second-time borrowers will qualify for $2 million and have to show they have suffered a 25% reduction in gross receipts.

“You can show that 25% reduction by comparing a quarter in 2020 to a quarter in 2019,” she explained.   

“If you’re a second time borrower, you have a limitation of 300 employees instead of 500 employees,” Kim-Stone added.

The new round of PPP also expands non-payroll eligible expenses to include PPP like plexi-glass or any cosmetic construction done to keep customers and staff safe.

“As long as you use 60% of the loan amount to your payroll costs and 40% to your non-payroll costs, then you will be eligible for forgiveness,” she said. “Whether it’s the first or second loan, the 60/40 split still applies.”

She encourages businesses that meet the eligibility requirements to apply as soon as possible.

“We are still stuck in tier two, and there’s a lot to get to tier three and tier four, so I think this is coming at a perfect time,” she said.  

Funding is set to expire March 31, 2021.

ProService recommends the following for potential borrowers:

  • If you’re a first-time PPP borrowerwith a minority, veteran, women-owned business that’s looking for less than $150,000 loan, take advantage of the two-day early access window (January 11-12) that the SBA is giving to these groups from community financial institutions.
  • If you’re a second-time PPP borrower with a minority, veteran, women-owned business that’s looking for less than $150,000 loan, take advantage of the two-day early access window (January 13-14) that the SBA is giving to these groups from community financial institutions.
  • For everyone else that’s looking for a first-time or second-time PPP loan, the SBA will open its portal up to all other lenders “shortly thereafter”. The soonest it could be for everyone else is January 15or when banks are ready to accept applications. Get familiar with PPP 2 and see if you’re eligible.
  • If applying for a second PPP loan, they recommend going through the same lender as your first-round as they’ll have a lot of your previous documentation.

More information can be found here.

Correction: A previous version of the story had the incorrect complete name for the acronym PPP, and the incorrect date to apply. PPP stands for Paycheck Protection Program. Businesses may apply on Jan. 11. The story has been corrected.

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