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COVID-19, small business in nj

How the PPP Round Three will Help Small Business Owners in New Jersey

On Behalf of Veitengruber Law | Feb 09,2021

The first two rounds of the Paycheck Protection Program (PPP) proved both popular and very effective, with NJ small businesses receiving billions of dollars in aid. This saved hundreds of thousands of jobs in our region that otherwise would have been lost to the COVID-19 pandemic. Due to this success, the third round of PPP began last month. The program, designed to help small businesses survive the current pandemic, is largely the same with some important differences. If you are a small business in need of assistance, here is what you need to know.
  1. New Rules
The maximum loan a small business can receive under the third round of PPP is $2 million. This is significantly less than the previous $10 million limit, but the payback period of 5 years and the 1% interest rate for unforgiven amounts are the same. The size of a small business's loan will be 2.5 times the monthly payroll (up to $100,000 per employee). Loans must be filed through Small Business Administration approved lenders.
  1. More Specific Eligibility Requirements
While it is possible for businesses who have never received a PPP loan to get a first or second loan, in order to qualify for the third round, there are additional requirements. A business must prove they lost 25% in at least one quarter in 2020 (as compared to the corresponding quarter from 2019). Businesses must also have no more than 300 employees per location. Publicly held companies and businesses started after February 12, 2020 are also excluded from the third round.
  1. Forgiveness Rules Have Changed
The best part of these PPP loans is that they are forgivable. New legislation has made forgiveness even easier. If your PPP loan is less than $150,000, you will simply need to fill out a one page form detailing your forgivable expenses and provide evidence that you have retained or restored employment for your full-time employees to the wages they were receiving February 15, 2020. You are now able to include operations expenditures, personal protective equipment, essential supplier costs (like perishable food), and other regular expenses essential to your specific business.
  1. More Money for Restaurants and Similar Businesses
Small businesses in the restaurant and accommodation industry (bed and breakfasts, hotels, caterers, etc.) are eligible for additional loans. These businesses can get up to 3.5 times their average monthly payroll.
  1. More Money for Small Businesses in Low Income Areas
If your small business is located in a low or moderate income area, you can benefit from the billions of dollars set aside for businesses in these specific locations. $15 billion was set aside specifically for community banks, credit unions, and agricultural credit unions in low- to moderate-income areas. An additional $15 billion is intended to go to community development institutions, minority depository institutions, and development companies in these communities. The PPP loan program has been a fantastic tool to help NJ small businesses keep their doors open throughout this pandemic. We can all help small businesses in our area by offering patronage whenever possible.

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