Small business owners,

If the news app on your smart phone is only filled with the news from Capitol Hill, you are missing out the latest updates from the Congress’s new economic stimulus plan, including the second round of PPP loans.

Before the end of December, lawmakers passed the bill of the second largest federal stimulus package after the $2 trillion CARES Act. In addition to the $600 stimulus direct payments to individuals, the package includes important and very-much anticipated second round of PPP loan funds. Businesses that missed the opportunity to apply during the first round and businesses that need additional funds are eligible to apply during the second round.

In the bill there is $284 billion

in appropriations for the new PPP loan program (“PPP2”), giving eligible borrowers an opportunity to receive a second round of funding. The major difference of PPP2 is its focus on small businesses. The loan has a cap of $2 million maximum. In order to be eligible, entities must:

  • Have 300 or less employees and have suffered a 25% revenue reduction in Q1, Q2 or Q3 as compared to the same quarter in 2019;
  • Meet eligibility requirements of PPP1, extended to include section 501(c)(6) entities;
  • Must not have specified ties to China or Hong Kong

Specifically, there is $35 billion of funds set aside for borrowers who were eligible but did not receive funds under the first PPP (“PPP1”). This includes the ability of borrowers who did not receive the proper amount or who returned a portion of the funds, often due to confusion around the program, to apply for funding on the funds they were entitled to receive.

In addition,

the new bill provides more clarity and easier guidelines for San Jose CA Bay Area small business owners. These new guidelines include:

  • Expansion of eligible and forgivable costs to include expenses that meet the definition of covered operating expenditures, covered property damage cost, covered supplier costs or covered worker protection expenditures (operating or capital in nature) – effective for PPP2 borrowers as well as PPP1 borrowers who have not yet applied for forgiveness.
  • Simplified forgiveness process for borrowers of loans $150,000 or less – process is legislatively required to include a certification-based application no more than one page in length – effective for PPP2 borrowers as well as PPP1 borrowers who have not yet applied for forgiveness.
  • Provides borrowers the ability to select the length of their covered period between 8 and 24-weeks, removing rigidity of prior SBA practice requiring the use of one or the other.

More importantly, for San Jose CA and Bay Area business owners who have an existing SBA loan and those who want to purchase a business using SBA loan, the new stimulus package continued the debt relief program, which provides for the SBA to make six months’ worth of principal and interest payments on behalf of borrowers. The Act provides an additional three months of payments starting February 2021, and in limited circumstances (for certain industries), an additional eight months of payments. For new SBA loans after February 2021, the SBA guaranty fee will be waived in addition to the six months of free loan payment.

In some sense, there probably has never been a better time to buy or sell a business in the San Jose CA Bay Area than now. No SBA loan fee, free six months of loan payments, and increased SBA loan limits can save a business buyer tens thousands of dollars. There are also many good businesses available for sale due to impact from COVID. Please contact us if you want to become a business owner or save money by using PPP or traditional SBA loan.

Helen Liu is the Principal Broker and President with Sunbelt Business Advisors for the San Jose CA Greater Bay Area. She can be reached at (408) 436-1900, or at [email protected]. Or connect with Helen on LinkedIn.