Updated: Mar 10, 2021
What Is The PPP?
The reauthorization and revival of the Paycheck Protection Plan (PPP) were officially approved on December 27, 2020. With that, we want to break down exactly what this means for you as a growing small business amid COVID-19! To be considered once applications are reopened, you must apply before the March 31, 2021 deadline. In this blog post, we’ll discuss what the PPP is, how you can qualify for it, how you can use it, and ways to utilize the PPP to stimulate growth in your business.
The Paycheck Protection Plan is an economic aid package of 285.45 billion dollars in the new Stimulus Bill created in efforts to assist small businesses facing inevitable hardship due to the pandemic. It is located in Title III of the 2021 Consolidated Appropriations Act as part of the Economic Aid To Hard-Hit Small Businesses, Nonprofits, and Venues Act. If used for the correct purposes, the PPP is entirely forgivable. So, we will discuss how you qualify and how you use the PPP upon receipt.
How Do You Qualify For The PPP?
Whether you’ve already benefitted from the first Paycheck Protection Plan, or you are seeking funds for the first time, there are some notable changes to eligibility and requirements. Especially if your small business previously received PPP loans, there are even more restrictive eligibility requirements.
In short, if one quarter of the year in 2020 was 25% worse than the same quarter in 2019, then you qualify for 2.5 months of payroll. For restaurants and live venues that have been hit the hardest amid COVID-19, you qualify for 3.5 months of payroll.
There are different requirements for qualifying depending on if you are a first-timer (First Tranche PPP Loans) or a second-timer (Second Tranche PPP Loans). For First Tranche PPP Loans, the requirements are less restrictive. You must meet the eligibility criteria satisfied in the Cares Act. Just like the first PPP, your small business must not exceed 500 employees. If you did not accept or you promptly returned your PPP loan in 2020, you qualify for re-application of a First Tranche Loan.
To qualify for a Second Tranche PPP loan, the eligibility criteria is more specific. First, your small business must employ no more than 300 employees. Along with that, you must provide proof that there has been a 25% reduction in gross receipts in any quarter in 2020 compared to the same quarter in 2019 For both First Tranche and Second Tranche PPP loans, the covered time that PPP loans must be expended has become more flexible on your end. You can now select any date that is no less than eight weeks and no more than twenty-four weeks from the date of disbursement.
For a more comprehensive list of criteria for qualification, check out these documents regarding information for first-time loans and second-time loans. To apply for the PPP through the SBA, fill out the Paycheck Protection Program Borrower Application Form before March 31, 2021.
How Can You Use The PPP?
Just like the first PPP, you can use the forgivable loan to cover payroll costs, rent, utilities, and interest on debt obligations and mortgage payments. Also, there are some new authorized uses of the PPP loan that are extremely important to know. If the PPP is used for anything outside of the authorized uses, it is not forgivable.
With this new reauthorization of the PPP, you can use it to cover certain group insurance payments, worker protection expenditures related to COVID-19, and property damage as a result of vandalism or looting in 2020 that is not covered from insurance. Along with that, it can also be used to cover some supplier costs and operations expenditures such as business software that facilitates business operations.
Ways To Utilize The PPP To Grow Your Business
With all the information you now have to fully prepare for both the application and use of the reauthorized PPP loan, let’s talk about ways to further utilize the PPP to stimulate growth in your business.
First and foremost, we want to reiterate that the PPP loan must be used for only the verified authorized uses. With that, you CANNOT use the PPP funds for any forms of marketing for your small business. However, with the received funds of the PPP, you can use your current funds that would otherwise be going toward payroll, rent, and utilities in a way that will stimulate growth in your business by increasing marketing efforts.
The most important way to keep a small business relevant in terms of marketing is to always be creative in marketing strategies. With that in mind, being creative with how you smartly spend money is vital. Now more than ever, small businesses need support. That’s where marketing comes into play. With assistance from the PPP, you can start to brainstorm what exactly you can do to increase marketing effectiveness to keep your business not just surviving, but flourishing!
Want some tangible ways you can do this? Consider increasing your Facebook media presence with new and innovative Facebook ads. Take new directions in marketing with new projects or perhaps finally hiring a new employee to focus on marketing, content writing, or social media. Or, finally take the time to produce a brand new video that will bring awareness to your small business.
Let Harvest Growth Elevate Your Business
If these tactics in continuing growth within your business amid COVID-19 sound like something you want to do, we’d LOVE to help. Here at Harvest Growth, we offer a free phone consultation from one of our product launch experts. Give us a call, and we’ll help your company thrive during these tumultuous times.