New Paycheck Protection Program will have more restrictions than the first
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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.
COVID-19 Economy FAQs
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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