The COVID-19 pandemic continues to spread awareness of its impact on small businesses, employees, and residents of the mountain state at large. There are many financial relief options available to help companies stay open and employees keep getting their paychecks. The Paycheck Protection Program (PPP) remains by far the largest financial assistance program ever implemented by the United States. And there is still time to apply.
To the average business owner, trying to understand the program and terms and conditions can seem daunting. My team from the West Virginia District Office of the US Small Business Administration is here to help. We are West Virgins with over 150 years combined federal and financial experience willing to help mountain state small businesses navigate and understand the various financial relief options available. I want to explain what is available through the Paycheck Protection Program (PPP).
PPP offers small business loans to pay for operating expenses and keep employees on payroll. The loan can be granted, meaning you don’t have to repay it if at least 60 percent is used for payroll and the remaining 40 percent is used for allowable business expenses: mortgage interest, rent, utilities, COVID worker protection (gloves, masks, screens), uninsured property damage costs caused by looting or vandalism in 2020, as well as certain supplier costs and operating costs. If used incorrectly, the loan will have a one percent interest rate and a two year maturity date if received before June 5, 2020 and a five year maturity date if issued after June 5, 2020 The loan is due .
There are two types of PPP loan: first draw and second draw. Companies that have not previously received a PPP loan apply for an initial draw loan. Certain companies that previously received a PPP loan can now apply for the second draw.
For First Draw you can qualify as a sole trader, independent contractor or self-employed. a small business as per SBA’s size standards; certain 501 (c) nonprofits, 501 (c) (19) veterans organizations, or tribal businesses; or any company with a North American Industrial Classification (NAICS) starting with “72” (Accommodation and Meal Services) with more than one physical location and fewer than 500 employees per location. A borrower is generally eligible for a second drawing PPP loan if the borrower has previously received a first drawing and has used or used the full amount for authorized purposes only. has no more than 300 employees; and can demonstrate a decrease in gross income of at least 25% between the comparable quarters of 2019 and 2020 (all income received or accrued in any form).
While the SBA oversees the program, who and when to loan paperwork is in the hands of approved PPP lenders as required by Congress. The Paycheck Protection Program ends on May 31, 2021 or until funds are depleted, whichever comes first.
You can check with the lender you are doing business with first to see if they are a guaranteed SBA lender providing PPP loans. If it doesn’t, don’t worry, SBA Lender Match can help you connect with a lender. You can also see all of the lenders in your area on one map.
Hopefully this has cleared up a lot of your questions, but keep in mind that you are not alone on this journey. The SBA and SBA Resource Partners are here to help. Sign up for SBA email updates at www.sba.gov/updates. These emails provide subscribers with helpful information and access to SBA West Virginia’s free training webinars and the latest SBA information as it becomes available. Visit www.sba.gov/wv for a full list of training courses, including detailed training on how to apply for a PPP loan and how to apply for PPP forgiveness. You can contact our office at [email protected]
If you need personal advice, the SBA resource partners are happy to help. Their business coaching services are free and confidential. Visit sba.gov/localassistance, enter your zip code and find the resource partner in your area. You can also contact the WV Small Business Development Center directly at 888-WVA-SBDC, the WV Women’s Business Center at 304-825-5000, and SCORE at 304-347-5463.
Karen Friel is the West Virginia District Coordinator for the US Small Business Administration.