Small businesses can officially begin applying for loans through the new version of the Paycheck Protection Program.
Yesterday, banks like Nicolet National Bank and JPMorgan Chase could begin submitting borrowers’ applications to the U.S. Small Business Administration.
When the federal government passed its second COVID-inspired stimulus package in December, it included a new round of the Paycheck Protection Program.
Between April and August last year, that program distributed more than $500 billion in forgivable loans to millions of businesses across the country.
Now the program is back, but eligibility requirements are different.
This time, only companies with fewer than 300 employees can apply.
And they must show a 25 percent reduction in revenue between comparable quarters in 2019 and 2020.
Joe Sturzl is a senior vice president in commercial lending with Nicolet National Bank who works with clients in Wausau and Rhinelander.
He said this cuts back on the number of businesses able to apply for the new round of loans.
“You have to look at the ones that were hit the hardest like hospitality, so bars, restaurants hotels,” he said. “They are going to significantly see it.”
Manufacturing businesses, Sturzl said, were less likely to see that 25 percent drop in revenue, so many aren’t eligible.
When a business does qualify for a loan, 60 percent must be used for payroll.
“If you look at where the money’s going, it’s going to payroll. So that money is going to get back into the communities via payroll,” Sturzl said.
If businesses spend the money like they’re supposed to, the SBA will forgive the loan. That means it won’t have to be paid back.
Sturzl said programs like the Paycheck Protection Program are important to preserve the economy.
“Just go to downtown Rhinelander and look at the restaurants and bars that were shut down. And people are still reluctant to go in because of the COVID fear,” Sturzl said. “You’ve got to give them a shot in the arm to get them through this.”
One of those businesses in Rhinelander is R&T’s Dinky Diner.
Terri Bowman, the owner, said the diner saw a 35 to 40 percent difference in business from before the pandemic to now.
That difference makes her eligible for PPP 2.0.
“Hopefully it will help with people not having to cut hours and things like that.”
With help from the loan, Bowman says R&T’s Dinky Diner won’t be going anywhere in the near future.
