INDIANAPOLIS — A lifeline for many small businesses across the country was the first round of the Paycheck Protection Program, also known as PPP.
It is a loan from the U.S. Small Business Administration to help businesses keep their employees on staff during mandated closures across the country.
The first round was in Spring 2020. As of last week, PPP resumed with the second draw of loans. As of Tuesday, it is open for all lenders to qualifying businesses.
Hotel Tango made a successful pivot when the pandemic began almost one year ago. Still, they are grateful for the chance to sign up for the second round of assistance from the Paycheck Protection Program.
"We shifted, we started making hand sanitizer," Mike Leary, Hotel Tango's CFO, said. "Originally we did it to donate to local first responders, hospitals, police, firefighters and we found that there was kind of a niche in the market that, that there was a shortage of hand sanitizer and we started producing it at larger quantities and started selling it to companies in Central Indiana. From there word went out that we were doing it and we were selling hand sanitizers throughout the entire nation."
It was help from an SBA PPP loan that let Hotel Tango keep paying their staff.
"As the original wave of the pandemic hit and the Paycheck Protection Program came out, we applied for that at the beginning of April as we shifted over some of our employees that were working in the tasting room into hand sanitizer production training," Leary said.
Businesses that received a loan during the first round can once again apply for a second round of support.
"There were some bumps along the road," said Stacey Poynter, SBA's Indiana District director. "We obviously have had time to smooth those bumps out, we have got the lenders on board. This will be the second round for the lenders. You know, we have had over 4,000 new lenders join the SBA last time. So we have experience from those lenders. So I think we will see a smoother process."
This time around, there are some different qualifications for businesses to be eligible to apply:
- No more than 300 employees
- At least a 25% reduction in gross receipts from quarter to quarter in 2019 and 2020.
The first round was capped at 500 employees and a 20% reduction.
"The maximum amount is now capped at $2 million," Poynter said. "Last time it was $10-million. This is calculated by two-and-a-half times the monthly payroll and if you are in the accommodations or food service business it's actually three-and-a-half times your monthly payroll."
However, similar to the first round of PPP, borrowers have to use 60% of the loan on payroll in order for the loan to be fully forgiven.
"You definitely want to apply if you have already asked for forgiveness and you are still waiting to hear about the forgiveness," Poynter said. "You still want to apply and prove that you used the money for eligible expenses and get that application in because the deadline is March 31, you don't want to wait. So if you know you met the eligible expenses the first time, you want to go ahead and apply and the lender will work with you on the discernment."
Hotel Tango has found success in a tumultuous business year, opening a new location in Zionsville this month. The distillery's CFO credits a good relationship with the SBA and their resources available in order to navigate the pandemic.
"I think it is super important to, as a smaller company, to work through the SBA," Leary said. "I think a lot of people look at the SBA as just a lending function, but they do have some other resources, they help provide hiring help, training help and kind of on the back end, they are looking out for small businesses and they work with the federal government to reduce administrative burdens that come along with operating a business."
The deadline for the second draw PPP applications is March 31. Poynter says to make sure borrowers have their financial documentation ready: 2019 tax returns and 2020 statements.
The SBA has a lender match tool on their website for businesses that do not have an active lender.
The Economic Injury Disaster Loan is still available and has been extended until Dec. 31.
Outside of COVID-19 relief loans, the SBA offers free resources, mentoring services, and educational programs for small businesses to find success.
For the most accurate and up to date information regarding PPP, visit the SBA website at www.sba.gov.