UNION COUNTY — The Union County Chamber of Commerce hosted a virtual seminar on what local, small businesses need to know about how the Paycheck Protection Program (PPP) will operate in 2021.

They spoke to two representatives from the North Carolina district office of the Small Business Administration (SBA) — Levi Kinnar, economic development specialist and Walter Lara-Figueroa, lender relations specialist.

Congress approved a $284 billion package to help small businesses a third time. It is an extension of the PPP Act that was passed almost a year ago in March. The third round is a first draw and the deadline is March 31, or when funds run out. First draw means that businesses did not receive PPP funding last summer. Those who are doing a first draw are within the guidelines of the first PPP funding — 500 employees, and up to $10 million and they do not have to prove a 25% loss in revenue.

The third round is different because the list of eligible businesses grew making the program more “flexible” than before, Kinnar said. Too, the ways in which a business can use the funding increased. “It’s mirroring the idle loan that you could use it for pretty much any operational expenses and the PPP was just more restrictive.”

Kinnar said the third round is retroactive, so if a business received PPP funding prior to the Aug. 9 deadline and had eligible, unclaimed expenses, they can go back and add those expenses by talking to a lender and getting those expenses forgiven.

An example of an eligible expense would be for restaurants who had to make modifications for social distancing and/or used PPP to cover employees’ salaries. Payroll software or any software a business uses is also considered an eligible expense, Lara-Figueroa said.

Lara-Figueroa said if anyone is interested in applying for PPP, “they should go ahead and do (the second draw).”

He said there is a “slower pace of demand” for PPP at this time. He estimates that the demand for funding will be met because there are “several safety nets” and “more control.” For second draw PPP, it is key for businesses to “have to have 25% reduction in growth receipts per corresponding calendar quarters.” This is important for smaller, local businesses.

As of Jan. 6 and a new stimulus bill, PPP can be claimed as a tax deduction. For businesses who meet a certain threshold, they are now eligible to receive both PPP and funding from an Economic Injury Disaster Loan (EIDL) advance which is a grant. Before 2021, businesses were unable to “double-dip” from both PPP and EIDL, Lara-Figueroa explained. Therefore, a majority or all expenses can be forgiven.

Businesses doing a second-draw must prove the business was in operation prior to Feb. 15, 2020. What people may not know, Lara-Figueroa said, was that if a business was purchased after February, they can still apply for funding as long as they can prove the businesses existence before Feb. 15, 2020.

Kinnar explained that businesses applying for a second-draw have to prove they spend their first-draw of PPP funding.

They do not need to submit their forgiveness application, but they have to prove how they expended those funds prior to applying for a second draw of PPP.

Once a business has spent their funding after eight weeks, that’s when they should be communicating with their lender about loan forgiveness. Lara-Figueroa said it’s important for businesses to communicate with lenders because each one may have different computer processes and data systems.

For more information, watch the discussion on the Chamber’s YouTube channel: https://youtu.be/w8_RrYQtous