Utah may be re-opening, but the same can’t be said for all its small businesses. Many have already fallen victim to the economic turmoil caused by COVID, with many more in danger of doing the same over the coming months. As businesses struggle to recoup the revenue lost to lockdown, keeping on top of payroll and operating costs becomes ever more challenging. But fortunately, help is out there – and as of June 5th, it’s now available on even better terms. If you’re a small business owner, here’s how to apply for a small business loan in Utah.
The Paycheck Protection Program Flexibility Act
In March, the government passed the Paycheck Protection Program (PPP) as one of a series of measures intended to provide financial relief to businesses adversely affected by the crisis. The first round of $349 billion was exhausted in just 13 days, while around $130 billion remains from the second round of $320 billion implemented in April. With a low-interest rate of 1%, loans of up to $10 million, no government fees, 6-month payment deferral, and the opportunity to request full loan forgiveness on the condition funds are used to maintain payroll, the program has provided a lifeline to millions of businesses across the states. It hasn’t, however, been without its criticism, with many business owners voicing concern that the rigidity of the rules for loan forgiveness could leave them on the hook for millions.
In response to the concerns, an amendment to the original bill was passed on June 5, offering increased flexibility to firms still struggling to deal with the aftershock of COVID-related closures. As Fox Business writes, the Paycheck Protection Program Flexibility Act revises several of the programs key constituents, namely:
- The forgiveness period is extended from eight weeks to 24 weeks (or Dec. 31, 2020, whichever comes first).
- To qualify for forgiveness, borrowers are now only required to spend 60 percent of loan funds on payroll, rather than the previous 75 percent rule.
- The amount of loan that can be spent on rent, utilities, and other operating costs has increased from 25% to 40%.
Rehiring requirements have been relaxed - if an owner is not able to rehire an individual who was an employee on or before Feb. 15 or is able to prove they were unable to hire a similarly qualified candidate, they may still qualify for forgiveness. Businesses previously had until June 30 to rehire workers and restore wage levels for their salaries to count toward forgiveness; this has now been extended to 31 December. Borrowers who don’t qualify for forgiveness now have 5 years to repay the loan, rather than the previous 2 (this applies only to loans approved after June 5: borrowers who received loans prior to this will need to request an extension of the payment terms directly with their lender). PPP borrowers are no longer excluded from the option to delay payment of their payroll taxes until December 31, 2020. The amendments have been hailed by many small business owners as a crucial step in the right direction – although with the cutoff point to the program still set for June 30, potential applicants only have a short while longer to take advantage of the new terms.
Who Qualifies for the PPP?
The Paycheck Protection Program Flexibility Act may have changed some of the PPP’s chief terms, but its eligibility criteria remains unchanged. If you’re interested in applying to the program, your business will need to have:
- Suffered a substantial financial loss as a result of COVID-related closures
- Launched prior to 1st Feb 2020
- Less than 500 employees on its payroll (those with more may still qualify if they meet SBA Size Standards by field or industry)
- Private non-profits, tribal concerns, 501 Veteran organizations, independent contractors, gig workers, sole proprietors, and self-employed workers employing 0-500 staff are also eligible to apply.
How Can I Apply for the Paycheck Protection Program in Utah?
As it stands, the application cut off for the PPP is June 30. To apply, you’ll need to submit a PPP Borrower Application Form along with your business records to any bank, credit union, or other lender that’s been approved by the SBA for participation. A full list of participating lenders in Utah can be found using the SBA’s Lender Finder Tool. As some small businesses have found themselves the target of scam lenders, avoid relaying any personal or business information to anyone (especially if they have contacted you proactively) prior to confirming they’ve approved to participate in the program.
The Economic Injury Disaster Loan
Like the PPP, the Economic Injury Disaster Loan is an SBA-backed loan intended to provide capital to small businesses struggling to recover from the COVID-19 crisis. Loans are available up to a maximum of $2 million on a fixed interest rate of 3.75%, come without the requirement of a personal guarantee or collateral, and have a 30-year maturity. While the full principal of the loan isn’t subject to loan forgiveness like the PPP, successful applicants do have the option to take $10,000 of the funds as a forgivable advance which, unlike the remaining funds, doesn’t need to be repaid. If you’re eligible for both, you’re welcome to apply for both the EIDL and the PPP – just be aware you’ll be asked to ensure the loan funds are used against different expenses (e.g. the PPP against maintaining payroll and the EIDL against operating costs).
Who Qualifies for the Economic Injury Disaster Loan?
Currently, eligibility for the EIDL is limited to small agricultural concerns employing 500 or fewer workers. As the eligibility requirements have become more limited since the program’s inception, it's advisable to check the EIDL Portal in case of any future relaxing of the acceptance criteria.
How Can I Apply for the Economic Injury Disaster Loan in Utah?
All applications to the EIDL are processed centrally by the SBA. To apply, complete the online application on the organization’s website. Expect to self-declare your eligibility before confirming details relating to payroll, ownership, and business activities. The application has been simplified for ease of use, but any applicant requiring support is invited to consult here for details of local support centers that can assist.
Written by Bill Vix
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