Starting February 24th, for two weeks, businesses and nonprofits with 20 or fewer employees can apply for a forgivable loan from the federal government, through a special allocation of the Paycheck Protection Program that is specifically for these very small businesses. Those who meet the stated qualifications will have the loans forgiven, eliminating debt from the loan, as described in the program details.
In addition to this special small business announcement, there are four other changes to the PPP that will go into effect the first week of March, opening the program to more underserved small businesses. These include:
- a revised PPP funding formula for sole proprietors, independent contractors and self-employed individuals to allow them to receive more financial support;
- eliminating a restriction on PPP access for small business owners with prior non-fraud felony convictions to allow them to receive funding;
- eliminating student loan debt delinquency as a disqualifier to participating in the PPP; and
- ensuring access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use an Individual Taxpayer Identification Number (ITIN) to apply for the PPP.
As before, the program is administered by the Small Business Administration (which has offices in Glendale), but the funds are accessed via a bank loan. Verify that your bank is participating in the PPP program, and if it isn’t, please contact LAEDC (213-236-4839 or [email protected]) to help establish the banking relationships needed to apply for PPP relief. LAEDC has a multi-lingual team that assists businesses at no cost, as part of our public-benefit mission.
There is more PPP program detail on LAEDC’s Connectory COVID resource page at: https://laedc.org/coronavirus/
Noteworthy points about PPP:
Loans are forgivable if, within the 8- to 24-week period after the loan is received, the organization:
- maintains employee and compensation levels
- spends the funds on payroll (at least 60% of total) and other eligible expenses
Funds can be spent on:
- payroll costs, including benefits
- mortgage interest, rent, utilities
- worker protection costs related to COVID-19
- certain other operations expenses