New Paycheck Protection Program will have more restrictions than the first
Share Now on:
A big part of Congress’s latest relief package is a new Paycheck Protection Program to help small businesses through the pandemic. Until now, details of how exactly the program will work have been scarce.
This week, the Small Business Administration is unveiling some new guidance on how it’ll determine business owners’ eligibility.
The new Paycheck Protection Program has more restrictions than the first one. It’ll only be available to companies with fewer than 300 employees. The limit last time was 500.
Phil McCollum, a tax partner with the accounting firm Henry+Horne, said many of his clients’ head counts have shifted over the past year, which raises questions.
“Do you have to look at what the number of employees were last December? The fourth quarter of 2019? Or can you just look at what’s happening this quarter,” he said.
Applicants will also have to prove their businesses had a 25% revenue drop between the fourth quarter of 2020 and the fourth quarter of 2019.
But many of the smallest businesses only keep yearly records, said Diane Sumpter, who runs the South Carolina Minority Business Enterprise Center, which is funded by the Commerce Department’s Minority Business Development Agency.
“When I think of barbershops, when I think of hairdressers, I think of salons. They will never have those quarterly things because they don’t keep up with it in that same vein,” she said.
Sumpter said she’s telling businesses to start preparing.
“I’m trying to get something right as we speak out saying get ready, get ready, get ready. At least have your documents that was required the first time,” she said.
But once guidance on how the rules should be implemented is released, Peter Alden, CEO of the Bay State Savings Bank in Massachusetts, said there’s a chance some customers won’t qualify.
“The last thing you want to do is have a customer assume that they’re eligible, give you all the information, then you got to say, ‘Guess what? You’re not,'” he said.
On the plus side, Alden said the bank’s gone through this already. So this time, the process should be more efficient.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.