Apply, apply, apply. That’s the message state and federal officials are sending to small business owners who need money to make it through the pandemic, as deadlines approach for new loan and grant programs.
On the state front, the deadline for the current round of money from the Massachusetts COVID-19 Small Business Grant Program has been extended to Monday at 11:59 pm. Meanwhile, the Small Business Administration began accepting some applications for the newest round of its Paycheck Protection Program this week, but the full rollout begins Tuesday. Even if you got a PPP loan last year, you can apply for another one.
Some business owners may be worried about taking on more debt, but the SBA has redesigned the PPP to make it forgivable. Need proof? This week the SBA reported that it has already approved nearly 85 percent of the total applications for PPP forgiveness, or about 1.1 million loans worth over than $100 billion.
Here’s what else you need to know:
Q. Massachusetts has set aside more than $700 million in small business grants. How can I apply for one?
A. The current round of grants, due Friday, aims to give relief to the hardest-hit sectors such as restaurants, gyms, indoor entertainment venues, nail salons, limo services, and florists. To learn more, go to empoweringsmallbusiness.org. Applications can be submitted online through a portal set up by the Massachusetts Growth Capital Corporation, the quasipublic agency administering the grants.
Q. If I applied for a state grant in an earlier round, do I need to submit another application?
A. No. But be sure to check on the status of your application to see that you’ve provided all the necessary materials so that your application is not rejected.
Q. If I miss the Monday deadline, am I out of luck?
A. It’s not entirely clear, but the state is committed to giving out all its grant money for small businesses. One program provides up to $75,000 for businesses with 50 or fewer employees, while another offers up to $25,000 to businesses with five or fewer workers.
Q. Can anyone apply for these state grants?
A. The grants are being given to small businesses most in need. For example, the state advises against applying if your business is not showing an operating loss due to the pandemic.
The state is requiring some key documentation in the application process including: a certificate of good standing from the Massachusetts Secretary of State’s office, a complete 2019 federal business tax return, and a complete 2019 federal personal tax return for each business owner with 20 percent or greater ownership.
Q. Applying for grants or loans can be overwhelming for small business owners. Can I get help?
A. Yes. A coalition of community organizations have formed Massachusetts Equitable PPP Access Initiative aimed to help small businesses owners navigate the federal and state funding options. Here’s a good place to start: the Local Initiatives Support Corporation, which has been offering PPP support and technical assistance programs for the MGCC state grant programs. You can find various programs here.
Q. If I get a PPP loan, how will I know it will be forgiven?
A. For first-time borrowers, you need to maintain employees and compensation levels; ensure the loan is spent on payroll costs and other eligible expenses; and that at least 60 percent of funds go to payroll. For second-time borrowers, the same rules apply and employee and compensation levels must be maintained in the same manner as the first loan. Borrowers must apply for loan forgiveness within 10 months of using up the funds.
Q. My business didn’t qualify for a PPP loan last year. Will it be eligible now?
A. Housing cooperatives, certain 501(c)(6) organizations, direct marketing organizations with fewer than 300 employees, and certain news organizations are now eligible to apply for PPP. Other businesses, including those who have ties to members of the US government, publicly traded companies, or any that have permanently closed are no longer eligible.
Q. I received PPP funds last year. What do I need to do to qualify for another round of loans?
A. Second draw loans will be awarded if companies have used all of their earlier PPP funds. This time the new loans cannot exceed $2 million and are limited to businesses with fewer than 300 employees. The maximum loan amount is 2.5 times the borrower’s monthly payroll costs. For restaurants, the amount is 3.5 times the borrower’s payroll costs.
Q. The timing requirements for PPP loans moved around so much my head was spinning. What does it look like now?
A. PPP borrowers can set their loan’s covered period to be any length between 8 and 24 weeks this cycle.
Q. What do I need to be able to show in order to access the funds?
A. Businesses must demonstrate a 25 percent loss of revenue in gross receipts in comparable quarters in 2019 and 2020.
Q. Some of my expenses weren’t covered by the first round of PPP. Can I get those things covered now?
A. PPP funds can cover payroll, rent, utilities, and interest on mortgages. In this newest round, the funds can also be used to cover additional expenses such as personal protective equipment for employees; tables, heaters and other costs associated with outdoor dining; computer software and other business management expenses; and property damage costs that occurred during public disturbances in 2020. The cost of additional employee benefits such as vision, dental, group life, and disability coverage can also be factored into payroll costs.