4 things New Jersey businesses should know when applying for a PPP loan

Last year, the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) was created by Congress through the U.S. CARES Act and enhanced in December 2020 through the Act. on Economic Aid for Small Businesses, Non-Profit Organizations and Aid Act). This was helpful news for small businesses across the country, including qualifying New Jersey businesses. PPP loans help with the payment of salary costs, rent, utilities and more for businesses that were established before February 15, 2020 and have not closed permanently.

The Economic Aid Law allows first-time (“first draw”, no previous PPP loan) or second time (“second draw”, previous PPP loan) borrowers to apply, and funds have been made available. aside to help eligible low-income borrowers. low-income neighborhoods and eligible borrowers with a maximum of 10 employees. To date, in 2021, more than 114,500 New Jersey businesses have received $ 7.5 billion in financing, with an average loan amount of around $ 66,000, indicating that small businesses in the state are securing funding. PPP funds.

According to the United States Bureau of Labor Statistics, unemployment in New Jersey remains among the highest in the country at 7.7%, showing that employers still have a critical need to access these forgivable loans for keep local workers on the payroll or hire additional staff.

Still considering applying for a PPP loan for your business? Here are four things to consider:

  1. Hurry up. The PPP Extension Law of 2021 renewed the PPP until May 31 – or until funds run out – but a lender can take several days to review and process your loan and the SBA to send the funds, so don’t wait until the last minute. to submit a request.

Once a business owner receives their PPP funds, a new clock begins to tick: the period covered by the PPP. The period covered is the time the borrower has to spend the full amount of his PPP loan and is the borrower’s choice between eight and 24 weeks. At the end of the period covered, the borrower has until their loan maturity date (the date on which the final loan payment is due) to request the forgiveness. Loan payments will begin 10 months after the end of the covered period, unless the borrower submits a forgiveness request before the 10-month end and receives a non-full forgiveness decision. No payments should be made on fully canceled loans.

  1. Use free resources. SCORE is an independent, free resource that supports small business owners with guides on the PPP app, a PPP loan calculator, and more. The SBA (sba.gov) also has hundreds of FAQ pages on related topics ranging from the documents needed to apply for a PPP loan to how nonprofits should indicate “ownership” on their PPP application.
  2. Sole proprietors and contractors are also eligible. Many freelancers, entrepreneurs and “on-demand workers” have been significantly affected by COVID-19, whether due to slower demand for work because companies are monitoring spending or consumers are slowing down carpools by due to health problems. The good news is that the SBA allows solo entrepreneurs to use a P3 loan to protect a single paycheck – yours – as long as you can provide the required documents to show your income.
  3. If used correctly, a PPP loan essentially becomes a grant. The SBA states that PPP funds can only be used for certain expenses related to owning and operating a business. As long as a business is spending the funds appropriately and can provide documentation showing that this is how the money was used, a PPP loan can be fully forgiven, meaning you don’t owe anything back on the loan. ready. This time around, more expenses are eligible for a discount, including payroll and benefits (must be 60% of how the loan is spent), mortgage interest / rent, utilities, software business or IT service costs, essential supplier costs, employee and customer safety expenses (such as PPE), and property damage resulting from the 2020 unrest.

To start a PPP loan application, contact an SBA Preferred Lender such as TD Bank or use the SBA Lender Matching Program to apply with a Community Financial Institution (CFI).

To access more business news, visit NJB News Now.

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