For business owners who received only partial forgiveness on their Paycheck Protection Program loans, consider this your stay of execution.
On January 27, 2022, the Small Business Administration, the agency in charge of administering the PPP, quietly issued a procedural notice outlining a new review policy for borrowers who got a partial loan forgiveness decision from their lender, or were instructed to apply for less forgiveness than they wanted.
As of January 27, if you want to appeal a partial forgiveness decision you will have 30 days–from receipt of a lender’s post-remittance notification–to tell the lender. The lender must then file for a loan review on behalf of the borrower within five days. The same process applies to borrowers whose lenders prevented them from applying for full forgiveness.
With less than three weeks remaining in 2021, you still have the opportunity to get a piece of the $100 billion left in Small Business Administration (SBA) loans and grants. December 31 is the last day applications will be accepted for the COVID-19 Economic Injury Disaster Loan (EIDL) and Targeted EIDL Advance. And the Supplemental Targeted Advance applications must be turned in no later than December 10, 2021.
$100 Billion in SBA Loans and Grants STILL Available for Small Business
One of the benefits of applying for government loans is the great rates. As a small business with less than 500 employees, you can apply for an EIDL loan of up to $2 million. The loan comes with a 3.75% interest rate if you are a for-profit company. And if you are a not-for-profit organization, the rate goes down to 2.75%. What makes it even more attractive is, these are 30-year loans.
When the Small Business Administration shuttered the Paycheck Protection Program for all lenders other than community financial institutions earlier this month–three weeks before the forgivable loan program’s May 31 end date–it sent shock waves through the system.
Womply, a loan facilitator based in San Francisco, quickly rattled off a report noting that as many as 1.6 million of its small-business customers would be left out. Numerated, the Boston-based digital lending platform for banks, said it had $1.4 billion in outstanding applications from more than 33,000 businesses that had been started but not yet approved by the SBA. Meanwhile, other lenders worked to scuttle their programs and divert borrowers, even as it remained unclear how much money was actually left.
The U.S. Small Business Administration said that new SBA borrowers between now and the end of September will get three months of payment relief–up to $9,000 per month–instead of six months. The move is due to budgetary constraints, according to the SBA announcement. The Coronavirus Aid, Relief and Economic Security Act allocated $3.5 billion for these payments, which the SBA believes will not cover six months of payments.
Before this past year, in which the coronavirus took more than 374,000 lives and permanently shuttered around four million small businesses, few people appreciated the crucial role of the U.S. Small Business Administration as well as Karen Mills.
Today, the former SBA administrator has plenty of company. More than 7.1 million businesses received some form of aid from the agency in 2020. Over 5.2 million small businesses received a Paycheck Protection Program loan during the first and second tranches of the aid program, 1.8 million businesses received debt relief from the agency, and more than 42,300 businesses received a loan through the SBA’s flagship 7(a) loan program in 2020.
The Paycheck Protection Program (PPP) has provided billions of dollars in loans to millions of small businesses. Most of the recipients received relatively small loans (average size of $80,000 for the second tranche of loans), but there are a significant number of recipients who received $1 million or more, and 40,000 businesses received $2 million or more.
However, while the program clearly allows businesses with up to 500 employees to take out loans of up to $10 million, Congress and the Administration are rethinking that, and are promising to examine and audit those companies that have received more than $2 million in PPP loans. In addition to that scrutiny, however, the press is actively pursuing companies that have received loans of $1 million or more, often “naming and shaming” them and pressuring them to return their PPP funds.
According to the Small Business Association, roughly 50 percent of businesses survive to reach their fifth year. What is interesting, however, is that the SBA’s analysis found that these survival rates generally remain consistent regardless of the overall state of the economy. In other words, lasting success is largely dependent on choosing the right business opportunity.
While understanding the basics of running a business is certainly important, your ability to recognize meaningful opportunities will play a major role in whether you author a lasting success story.
Idenitfying these opportunities isn’t an exact science, but there are still telltale signs to look out for, beginning with the following five.
2. Nobody With A Job Can Help You Become An Entrepreneur
If you spend two seconds thinking about that statement, the truth of it becomes evident. Unfortunately, if you want to become an entrepreneur, the most visible sources of help are the least helpful.
It doesn’t matter how much information you have about how businesses are launched, the missing element is the courage to actually take risks. The entrepreneur, while reducing risk, must embrace it to make their goal a reality. If you need a steady paycheck, you are not an entrepreneur. So why would you get direction from someone who does?
Luck that takes the form of finding valuable or pleasant things that are not looked for
Coined by novelist Horace Walpole based on the fairy tale The Three Princes of Serendip. The Princes were supposedly making these happy discoveries they were not looking for.
TIP OF THE WEEK
Serendipity comes with SBA 7(a) loans.
The IRS has issued a new Form 4506-T and all SBA 7(a) and 504 related requests for IRS tax transcripts must be submitted to IRS Service Centers using the new IRS Form 4506-T (Rev. August 2014).