Unless Congress extends the deadline, Alaskans have a little less than a week to apply for the open round of the Paycheck Protection Plan. The loan program is designed to keep workers on the payroll instead of unemployment insurance.
The application period started in January, and most of the corporate banks in Alaska are participating.
Clark Bihag, the senior area manager for the Small Business Administration, says the SBA has already approved 7,348 loans in Alaska and brought in $580,995,853 as of March 21 in this second round of the PPP.
Bihag says it’s all about keeping people on the payroll, but employers have to follow a few rules.
“In order for the loans to be forgiven and become grants, the borrower has to spend somewhere between 60 and 100% of it on payroll. minimum 60%,” Bihag said.
The remainder must be spent on mortgage, rent and utilities. The borrower can set up the loan period anywhere between eight and 24 weeks. But the main focus is Alaska workers.
“Depending on how much your loan is, you have to either maintain, or restore your employee levels back to what it was as of Feb. 15. And you have to maintain your compensation levels,” Bihag said.
Across the country, the average loan size is about $63,000.
The money comes from CARES II, the second pandemic relief bill passed by Congress in December. It expanded eligibility for the loans to include nonprofits, live venues and cultural institutions which have been struggling due to pandemic-forced closures.
Bihag says he wants to make sure business take advantage of the changes. For example, the first round of the Payroll Protection Program was difficult for the smallest of businesses, sole proprietors.
“When the old formula was in place, a lot of sole proprietors couldn’t benefit because they either had no net income, or it was very little, that it didn’t make sense for them to apply,” Bihag said. “So there was a change to the formula, if you are a Schedule C filer, you can now use your gross income, to calculate your PPP loan amount.”
Bihag and the Alaska Small Business Development Center offer free webinars every Wednesday on various coronavirus relief programs. And more money for businesses is on the horizon, from the American Rescue Act.
“Out of the American Rescue Plan Act, there are new programs that are still being developed. There is the Restaurant Revitalization Fund Grant. It’s gonna help businesses that are in the foods and service industries,” Bihag said.
The deadline for the PPP is Wednesday, March 31. An extension bill has passed the U.S. House. If it is taken up by the U.S. Senate and signed into law before next Wednesday, the application deadline will be extended to June.