By David Gould, Staff Editor
This week, the Small Business Administration reopens its Paycheck Protection Program, offering loans to small businesses that in most cases won’t call for repayment. Whether or not you or your golf academy participated in the original 2020 round, you may have heard about mixups and unintended consequences of the first effort. Those various issues have triggered changes and antidotes that account for what may seem like odd or arbitrary policies and procedures, this time around.
With that in mind, here’s what you need to know about round two of the PPP, and how its tweaked structure might affect you:
>> Applications will be limited at first to citizens who work with smaller, community-based lenders. Once their applications are taken, business people who work with larger banks will get their chance to apply.
>> In addition to placing clients of smaller lenders at the front of the line, the SBA has made it clear that PPP loans will be prioritized for women, people of color, and veterans.
>> Monday, January 11 is kickoff day for this round—it applies to smaller businesses that did not receive a PPP loan the first time around. If you are one of the many Proponent Group members who did receive one of the original loans, your shot to apply for a second one starts Wednesday, January 13, provided you meet eligibility requirements.
>> PPP has been extensively revised from its original form—its focus on payroll costs was seen as too restrictive by many business owners. While job retention is still the goal, the new loans will be more flexible. For example, the borrower is allowed to set their PPP loan’s covered period for any time period between 8 and 24 weeks, according to their particular needs. Also, you can use the money from this sequel PPP to cover more spending categories, including property damage costs, supplier costs, and worker protection expenditures. Finally, this round is said to provide greater flexibility for seasonal employees, a tweak that will definitely have some positive impact within golf, including the instruction segment.
>> Regarding who’s eligible, the raw basics are criteria most any Proponent member easily fits within—Your business was operational before mid-February of 2020, it’s still open and running and you have fewer than 500 employees. The other basic requirement applies only to people who got money the first time around—it mandates that you already spent those funds.
>> The nitty-gritty of eligibility involves whether or not you’ve taken a significant hit, revenue-wise, in the pandemic period. So, looking back at 2020, you need to show a revenue fall-off, versus 2019, of 25 percent of more. That falloff can be shown in one of two ways, either by comparing your annual gross revenue as reported on your tax return between 2020 and 2019, or by comparing your gross revenue in any quarter in 2020 with your gross revenue in that same quarter of 2019. So, if you decide to use Q2 of 2019 as your reference point for loan eligibility, and you took in $10,000 that quarter, you meet the eligibility requirement if your Q2 revenue in 2020 was $7,500 or less.
As always, a conversation with your CPA and/or the bank that handles your business account is highly advisable. One final point, applications for forgiveness of any PPP money you received last year aren’t yet required, but they will be soon. Check with your lender on that.