| Dear Friend,
Round 2 of the Paycheck Protection Program (PPP) begins this morning, as the Small Business Administration accepts new applications for the potentially forgivable federal loans.
However, businesses with employees, sole proprietors and independent contractors need to act now if they hope to tap into the new $310 billion pool of funding, according to Bruce Nordstrom of Nordstrom & Associates P.C. in Flagstaff.
“The sooner the application is submitted, the better chance funds will be available from the second round of funding,” said Nordstrom, whose firm has been providing tax, accounting and business consulting services to local companies for more than 35 years. He described the program, which allows businesses to apply for about 2.5 months of payroll costs, as “a lifeline” for those seriously affected by the COVID-19 pandemic.
The first round of PPP, which totaled $349 billion, was exhausted in less than two weeks amid some controversy, as national brands, like the Ruth’s Chris Steakhouse and Shake Shack restaurant chains, received millions. (Both ultimately returned the money after a public outcry.) Banks had difficulty ramping up their lending departments to deal with the loans and certain institutions initially would only process applications for clients that already had loans with them.
The federal government tried to address some of these issues in the latest relief effort. For example, the new legislation for PPP mandates that at least $60 billion of the funds go to small lenders.
Here are a couple of resources that may help if you are applying for PPP now:
- From the Small Business Administration district office for Arizona, the current list of PPP lenders in the state, including what communities they serve, whether they are accepting new clients, and a list of alternative online lenders, such as Kabbage, PayPal and Square.
- A helpful loan calculator from the Arizona Commerce Authority that not only determines the amount a business should request, but also how much of that loan might be forgiven based on non-payroll expenses such as rent and utilities. About one-quarter of your loan can be used for non-payroll purposes and still be forgiven. Everything else eventually converts to a 2-year loan at 1% interest rate.
Gov. Doug Ducey said last week he will not be rushed in reopening the state’s economy, and hinted that the lifting of restrictions on travel and business will be done on a gradual basis, much as they were implemented in the first place.
For some regional businesses, funds provided through PPP and similar programs may make the existential difference between being able to reopen when restrictions are rescinded and being able to reopen at all.
Stay safe,
Gail Jackson
Interim President & CEO
Economic Collaborative
of Northern Arizona |
