PPP loans are still available: Here are 4 reasons to apply

Gov. Phil Murphy recently signed a five-bill package that will provide $100 million in grants to various small businesses, restaurants, arts and cultural establishments, and nonprofits in New Jersey. Such grant programs provide additional relief and demonstrate a need still exists in the state to support local organizations.

These programs, however, are not yet distributing funds. That’s why small businesses that need funding now should consider a Paycheck Protection Program loan.

More than 114,500 New Jersey businesses have accessed $7.5 billion during this second round of funding, with an average loan amount of about $66,000, indicating that the state’s smaller businesses are getting much-needed loans. These loans are expected to be converted into grants, too.

Small businesses still have time to apply. So, if you’re still wondering if a PPP loan could be right for your business, here are four things to consider:

  1. Time is of the essence: The PPP Extension Act of 2021 renewed the PPP through May 31, although it is currently anticipated that the funds could run out in mid-May. It may take several days for a lender to review and process your loan and the Small Business Administration to send the funds, so don’t wait until the last minute to submit an application. Once a business owner receives PPP funds, a new clock starts ticking: the PPP covered period. The covered period is the time a borrower has to spend the full amount of the PPP loan; it is the borrower’s choice of any time between eight and 24 weeks. After the covered period ends, the borrower has until the loan maturity date (the date the final payment of the loan is due) to apply for forgiveness. Loan payments will begin 10 months after the end of the covered period, unless the borrower submits a forgiveness application before the 10 months are up and receives a decision of less than full forgiveness. No payments need to be made on fully forgiven loans.
  1. Use free resources: SCORE is an independent, free resource that supports small business owners and offers guides on the PPP application, a PPP loan calculator and more. The SBA also has hundreds of pages of FAQs on related topics, from what documents are needed to apply for a PPP loan to how nonprofits should list “ownership” on their PPP application.
  2. Sole proprietors and contractors qualify, too: Many freelancers, contractors and “gig workers” have been significantly affected by COVID-19, whether from slower demand for work because companies are watching expenses or consumers putting the brakes on ride shares due to health concerns. The good news is that the SBA allows solo entrepreneurs to use a PPP loan to protect a single paycheck — your own — as long as you can provide the required documents to show income records.
  3. If used properly, a PPP loan essentially becomes a grant: The SBA states that PPP funds can be used only for certain expenses related to owning and operating a business. As long as a business spends the funds appropriately and can provide documentation to show that’s how the money was used, a PPP loan could be fully forgiven, meaning you don’t owe anything back on the loan. This time around, more expenses are eligible for forgiveness, including payroll and benefits (must make up 60% of how the loan is spent), mortgage interest/rent, utilities, business software or computing-service costs, essential supplier costs, expenditures for employee and customer safety (such as personal protective equipment) and property damage resulting from 2020 unrest.

To get started on a PPP loan application, contact an SBA preferred lender or use the SBA’s Lender Match program to apply through a community financial institution.

Tom Pretty is the head of SBA Lending at TD Bank.