Last year, the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) was created by Congress through the U.S. CARES Act and further enhanced in December 2020 through the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act). This was helpful news for small businesses nationwide including eligible businesses in New Jersey. PPP loans assist with the payment of payroll costs, rent, utilities and more for businesses that were established before Feb. 15, 2020, and have not permanently closed.
The Economic Aid Act allows both first time (“First Draw”, no previous PPP loan) or second time (“Second Draw”, previous PPP loan) borrowers to apply, and funds have been set aside to help eligible borrowers in low-income to moderate-income neighborhoods and eligible borrowers with a maximum of 10 employees. To date in 2021, more than 114,500 New Jersey businesses have received $7.5 billion in funding, with an average loan amount of about $66,000, indicating that the state’s smaller businesses are obtaining PPP funds.
According to the U.S. Bureau of Labor Statistics, unemployment in New Jersey remains among the country’s highest at 7.7%, showing that there is still a critical need for employers to access these forgivable loans to keep local workers on payroll or hire additional staff.
Still thinking about applying for a PPP loan for your business? Here are four things to consider:
Once a business owner receives their PPP funds, a new clock starts ticking: the PPP covered period. The covered period is the time a borrower has to spend the full amount of their PPP loan and is the borrower’s choice of any time between eight and 24 weeks. After the covered period ends, the borrower has until their loan maturity date (the date that the final payment of the loan is due) to apply for forgiveness. Loan payments will begin 10 months after the end of the covered period, unless the borrower submits a forgiveness application before the 10 months are up and receives a decision of less than full forgiveness. No payments need to be made on fully forgiven loans.
To get started on a PPP loan application, contact an SBA Preferred Lender such as TD Bank or use the SBA’s Lender Match program to apply through a Community Financial Institution (CFI).
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