A program rooted in the early days of the pandemic that helped thousands of Illinois businesses is gearing up for a new round of funding.
If you missed out on the first round of the U.S. Small Business Administration’s forgivable loans through the Paycheck Protection Program, you will soon be able to apply for one as lawmakers passed another COVID-19 relief package.
As part of a larger government funding and stimulus package, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act was signed into law on Dec. 27. It includes another $284.45 billion for the Paycheck Protection Program, a forgivable loan program that Congress first created in the early days of the COVID-19 crisis in March.
Under the relief bill, businesses can receive a loan equal to the lesser of either 2.5 times its average monthly payroll costs either one year before the date of the second round of PPP disbursements, or calendar year 2019.
However, the maximum loan amount is capped at $2 million, compared to the $10 million maximum for the first round.
The law also provides for a simplified loan forgiveness process for loans up to $150,000.
It gives borrowers the ability to apply for a second round of funding and expands the types of expenses that are eligible for forgiveness.
Borrowers are still required to spend at least 60% of their PPP loan on eligible payroll costs to be eligible for full forgiveness, but this time borrowers can use loans for: additional group insurance expenditures, covered supplier cost expenditures,
To apply, businesses must have no more than 300 employees and suffered a gross revenue reduction of at least 25% between comparable quarters in 2019 and 2020.
Organizations that weren’t eligible for the first round of the loans could now be eligible, including nonprofits, trade organizations, chambers of commerce and others.
Borrowers that returned al or part of their first loan can reapply for the maximum amount under the new law.
The SBA is required to issue implementing regulations by Jan. 6, so these loans aren’t yet available. We expect further information and guidance from the agency in the coming days.
We are watching the situation closely. To stay prepared, the Illinois Hispanic Chamber of Commerce (IHCC) are inviting businesses to register now to receive PPP updates.
