Governor Phil Murphy recently signed a five-bill package that will provide $ 100 million in grants to various New Jersey small businesses, restaurants, arts and culture establishments, and nonprofits. These grant programs provide additional relief and demonstrate that there is still a need in the state to support local organizations.
However, these programs do not yet distribute funds. That is why small businesses that need financing now should consider a Paycheck Protection Program Loan.
More than 114,500 New Jersey businesses accessed $ 7.5 billion in this second round of funding, with an average loan amount of around $ 66,000, indicating that small businesses in the state get much-needed loans. These loans should also be converted into grants.
Small businesses still have time to apply. So, if you’re still wondering if a PPP loan might be right for your business, here are four things to consider:
- Hurry up: The PPP Extension Law of 2021 renewed the PPP until May 31, although it is currently expected that 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 a request. Once a business owner receives PPP funds, a new clock begins to tick: the period covered by the PPP. The period covered is the time available to the borrower to spend the total amount of the PPP loan; it is the borrower’s choice anytime between eight and 24 weeks. At the end of the period covered, the borrower has until the 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.
- Use free resources: GOAL is an independent, free resource that supports small business owners with guides on the PPP app, a PPP loan calculator, and more. The SBA also has hundreds of FAQ pages on related topics, from what documents are needed to apply for a PPP loan to how nonprofits should indicate âownershipâ on their PPP application.
- Sole proprietors and entrepreneurs 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.
- 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, expenses for employee and customer safety (such as personal protective equipment), and property damage resulting from the 2020 unrest.
To start a PPP loan application, contact an SBA Preferred Lender or use the SBA Lender Match program to apply through a community financial institution.
Tom Pretty is the SBA Loans Manager at TD Bank.