President Donald Trump signed into law the roughly $900 billion coronavirus relief package. The new act will provide $285 billion in loans to small businesses as part of the Paycheck Protection Program (PPP).
The meeting and hospitality industry is one of the hardest hit by the pandemic and likely will be one of the last to recover. Jules Clifford owns Event Photography of North America Corporation (EPNAC) located in Washington, DC. He says he lost $250,000 in business in the first two days of the pandemic. Last May, he got a $54,000 PPP loan and has been using it to pay his employees even though he’s lost almost all of his business.
“I’m getting some additional troubling news with some of my clients who canceled face-to-face conferences in 2020 and asked to push contracts to 2021,” said Clifford. “And now they’re already contacting me and asking us to push from 2021 to 2022.”
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Clifford said this PPP loan is long overdue and probably too late for a lot of people, however for those businesses still around, it can’t get here soon enough.
Some of the aspects of this round of the PPP will remain the same. The loan will be forgivable if all requirements are met. However, eligibility is stricter than before. New loans will be capped at $2 million compared to $10 million. Applicants must have no more than 300 employees instead of 500. Business must also show at least a 25% drop in revenues during the first, second, or third quarter in 2020 compared to the same time period in 2019. And forgiveness of a PPP loan is not taxable.
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The roll-out of the first PPP loans was plagued with problems, including a complex application process that caused delays in approving loans for thousands of businesses. Clifford hopes that banks and the Small Business Administration (SBA) learned from their mistakes so that this time around businesses get the money they need to stay open.
In a statement, the Small Business Administration says, “The SBA, in consultation with the Department of Treasury, is working expeditiously to identify changes to program rules forms, and processes as laid out in the legislative text, and to appropriately update guidance and systems for PPP lenders and borrowers. SBA and Treasury are committed to ensuring that the next round of PPP is launched as quickly as possible to deliver critical economic relief to America’s small businesses. We will not have further comment at this time.”