COVID-19: Breaking News for the Business Community

This week, SBA announced that the deadline to apply for a COVID-19 pandemic Economic Injury Disaster Loan has been extended to December 31, 2021.

To date, SBA has approved $197 billion in low-interest loans, which provide U.S. small businesses, non-profits, and agricultural businesses working capital funds. Economic Injury Disaster Loan applications will continue to be accepted through December 2021, pending the availability of funds.

Loans are offered at affordable terms, including a 3.75% interest rate for small businesses and 2.75% for non-profit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. All eligible small businesses and nonprofits are encouraged to apply.

Learn more and apply for an Economic Injury Disaster Loan.

SBA and Treasury Announce PPP Re-Opening; Issue New Guidance:

The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced today that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13.  The PPP will open to all participating lenders shortly thereafter. 

Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.

This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.

“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said Administrator Jovita Carranza. “Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”

“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin. “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”

Key PPP updates include:

• PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
• PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
• The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
• The PPP provides greater flexibility for seasonal employees;
• Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
• Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan. 

A borrower in generally eligible for a Second Draw PPP Loan if the borrower:

• Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
• Has no more than 300 employees; and
• Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

The new guidance released includes:

• PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns;
• Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and
• Interim Final Rule on Second Draw PPP Loans.

For more information on SBA’s assistance to small businesses, visit sba.gov/ppp or treasury.gov/cares. 

Disclaimer: The SBA does not endorse the organizations sponsoring linked websites, and does not endorse the views they express or the products/services they offer. All programs and services are extended to the public on a nondiscriminatory basis. 

USSBA Debuts New PPP information:

Paycheck Protection Program 1 (PPP1):

The threshold for simplified forgiveness is now $150,000. For loans below $150,000 the borrower will sign and submit a 1 page certification of the loan amount, number of employees retained and estimated total amount of loan spend on eligible costs.

Paycheck Protection Program 2 (PPP2):

PPP2 funds are also available to borrowers who have previously received PPP loans provided they:

• Have 300 or fewer employees, and
• Have already or will use the full amount of their first PPP loan, and
• Can demonstrate a 25-percent decline in gross revenue in any 2020 quarter compared with the same quarter in 2019

The PPP2 loan amounts will be 2.5 times average monthly payroll costs, to a maximum of $2 million. Certain hotels and restaurants can apply for up to 3.5 times their average monthly payroll costs. The costs eligible for loan forgiveness with the PPP2 are the same as before — payroll, rent, covered mortgage interest and utilities — but this time add:

• Personal protective equipment (PPE)
• Expenditures to suppliers that are essential to the business’ ongoing operations
• Software and cloud computing services
• Accounting services

Contact your Lender:

Reach out to your lender and inquire when their portal will be opened for simple forgiveness for the PPP1.

Reach out to your lender and let them know you are interested in the PPP2 loan. And have your documentation so you are ready to go when the portal opens.

FEDERAL STIMULUS PACKAGE SUMMARY:
Source: Melanie Willoughby, Executive Director, NJBAC

Small Business - $325 Billion

Democrats secured critical funding and policy changes to help small businesses, including minority-owned businesses, and nonprofits recover from the pandemic. This bill includes $284 billion for the Paycheck Protection Program (PPP) and extends PPP through March 31, 2021. Changes to PPP include:

• Provides a second PPP forgivable loan for the hardest-hit small businesses and non- profits with 300 or fewer employees and that can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019;
• Creates a dedicated $15 billion set-aside for lending through community financial institutions, including Community Development Financial Institutions and Minority Depository Institutions to increase access for minority-owned and other underserved small businesses and nonprofits;
• Creates a set-aside for very small businesses with 10 or fewer employees and for small businesses located in distressed areas;
• Expands PPP eligibility for more critical access hospitals, local newspapers and TV and radio broadcasters, housing cooperatives, and 501(c)(6) nonprofits, including tourism promotion organizations and local chambers of commerce;
• Allows for small businesses in the restaurant and hospitality industries to receive larger awards of 3.5 times average total monthly payroll, rather than 2.5 times;
• Adds PPE expenses, costs associated with outdoor dining, and supplier costs as eligible and forgivable expenses;
• Simplifies the forgiveness process for loans of $150,000 and less;

Repeals the requirement of deducting an EIDL Advance from the PPP forgiveness amount.

EIDL Grant Program - $20 Billion

This bill includes $20 billion for EIDL Advance grants. Small businesses and nonprofits in low- income communities are eligible to receive $10,000 grants. Any small businesses and nonprofits in low-income communities that received an EIDL Advance previously are also eligible to receive the full $10,000 if their award was less in the first round of grants.

Grants for Shuttered Venue Operators - $15 Billion

The bill provides $15 billion for SBA grants up to $10 million to live venues, independent movie theaters, and cultural institutions to address the economic effects of the pandemic. Grants can be used to cover expenses such as payroll costs, rent, utilities, and personal protective equipment. Two priority periods are established to ensure the hardest hit entities have dedicated access to assistance for the first 28 days of the program, while a reserve fund is made available ensure entities that are ineligible for the priority periods are able to receive assistance following the two 14-day priority periods. A set-aside of $2 billion is also reserved for entities with 50 or fewer employees. The program is authorized to make supplemental grants equal to 50 percent of the initial grant.

Extended SBA Debt Relief Payments - $3.5 Billion

This bill provides $3.5 billion to resume debt relief payments of principal and interest (P&I) on small business loans guaranteed by the SBA under the 7(a), 504 and microloan programs. All borrowers with qualifying loans approved by the SBA prior to the CARES Act will receive an additional three months of P&I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month. After the three-month period described above, borrowers considered to be underserved—namely the smallest or hardest-hit by the pandemic— will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month. SBA payments of P&I on the first 6 months of newly approved loans will resume for all loans approved between February 1 and September 30, 2021, also capped at $9,000 per month.

Enhancements of SBA Lending Programs - $2 Billion

This bill provides $2 billion to enhance SBA’s core programs, including 7(a), Community Advantage, 504, and the Microloan program, by making them more affordable and useful to small businesses. It also provides $57 million for the SBA Microloan Program to provide technical assistance and leverage about $64 million in microloans for minority-owned and other underserved small businesses.

Melanie Willoughby
Executive Director
NJ Business Action Center
33 West State Street
P.O. Box 820
Trenton, NJ 08625-0820
P: 609-633-8301
C: 609-462-6917
Melanie.Willoughby@sos.nj.gov

New Jersey Economic Development Authority (NJEDA) Brownfields Loan Program open on January 14th, 2021:

Applications for the New Jersey Economic Development Authority (NJEDA) Brownfields Loan Program open on January 14th, 2021. This competitive loan program provides low-interest loans of up to $5 million to brownfield redevelopment projects for all aspects of brownfield revitalization, including assessment, investigation, and demolition.

Learn more and prepare to apply at https://www.njeda.com/bfloans.

The new Brownfields Loan Program provides financing to potential brownfield site purchasers and current brownfield site owners who intend to develop commercial, retail, or mixed-use developments, expansions, or reuses. Unlike many funding sources for brownfields projects, the Brownfields Loan Program will finance pre-construction planning, demolition, asbestos, PCB removal, and lead-based paint remediation.

Loans made through the program will have ten-year terms with no interest for the first two years and only interest payments required for the subsequent two years. Interest rates on loans made through the program will be between two and three percent, with reductions available for projects that promote environmental resiliency, public health, and community well-being.

More information and complete eligibility criteria are available at https://www.njeda.com/bfloans.

Applications for the Brownfields Loan Program will be open from January 14th to April 13th, 2021. Loans will be awarded through a competitive application process, with projects receiving scores based on various details about the brownfield site and the proposed redevelopment project. Projects that provide beneficial end uses will receive higher scores.

Please join NJEDA for a webinar on January 14th at 2p.m. by registering at: http://bit.ly/NJEDABFLoanProg.

If you have questions about the Brownfields Loan Program or the application process, please reach out to the NJEDA Brownfields Team at brownfieldsloan@njeda.com.

Julia L. Wong, MCRP
Office of Brownfield & Community Revitalization
NJ Department of Environmental Protection
Wong, Julia Julia.Wong@dep.nj.gov