Bertch Cabinet Mfg. Inc., Waterloo, IA (above) and EuroContempo Cabinetry, Mesa, AZ, (below) were among hundreds of cabinet firms who received Paycheck Protection Program loans in 2020.
WASHINGTON, DC – Funds from the latest pandemic relief programs aimed at small businesses have begun to flow into the market, including the Paycheck Protection Program (PPP).
The previous PPPs issued in April and August 2020 were popular with woodworking firms. Nearly half of those surveyed applied for and received funds, according to an industry study by Woodworking Network. Of those, 75% said they also planned to apply for loan forgiveness.
The newest round of PPP loans is part of a pandemic relief bill passed by Congress Dec. 22. The U.S. Small Business Administration says it has already approved approximately 60,000 PPP loan applications submitted by nearly 3,000 lenders, for over $5 billion, in the week following the program’s re-opening Jan. 11. The first two PPP rounds opened between March and August 2020 were a historic success helping 5.2 million small businesses keep 51 million workers employed.
To qualify for the loans, a company must generally have 500 or fewer workers, although companies in some sectors, including kitchen cabinets and countertops, can qualify with more employees. The SBA application form requires businesses to certify that “current economic uncertainty makes this loan request necessary” to support continuing operations.
Applicants also must have been in operation on Feb. 15, 2020, to qualify. And for this round, self-employed business owners and independent contractors are eligible for loans. But for sole proprietorships, SBA requires that the business had shown a profit on its 2019 tax return to qualify, according to a New York Times analysis.
In an effort to focus the loans on smaller businesses and give first-timers a chance, the latest loans were available during their first week to borrowers who had not received a PPP loan last time, and to community financial institutions that specialize in serving under-served communities. As of Jan. 19, the Paycheck Protection Program was opened to all participating lenders.
“With PPP re-opening for all First and Second Draw loan applications, the SBA remains committed to keeping small business workers on payroll and their doors open during this challenging time,” says SBA Administrator Jovita Carranza. “Data from our first week, which first allowed hundreds of community financial institutions to submit applications, then opened wider to small banks, demonstrate that we have helped tens of thousands of businesses.”
Second Draw PPP loans are for eligible small businesses with 300 employees or less that previously received a First Draw PPP loan. These borrowers will have to use or have used the full amount of their First Draw loan only for authorized uses and demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The maximum amount of a Second Draw PPP loan is $2 million.
The Paycheck Protection Program remains open for First and Second Draw PPP loans until March 31, 2021, as set forth in the Economic Aid Act, or until Congressionally-appropriated funding is exhausted.