Increasing the size of your first PPP loan
Before we get to PPP #2, here's what you need to know about PPP #1.
On April 27, the SBA changed the rules for seasonal businesses to determine the size of their loan. They allowed seasonal businesses to choose any 12-week period over Spring and Summer 2019 as their base period. In mid-May, the SBA gave businesses that had already received a loan before April 27 a few days to request a loan increase based on the new rules. Most camps missed this window.
The new bill allows any PPP #1 borrower to request a loan increase if they missed the window.
Many camps applied to SBA as a non-seasonal employer, as that was what would maximize the loan amount when the program launched in April. The bill doesn't explicitly state an employer can correct their designation to seasonal and apply for the larger amount, but it is very likely that will be possible.
Using the any 12-week formula, your PPP#1 loan will likely be 2-4x bigger than the loan amount you received.
To calculate your loan amount, pick your 12 week period in 2019 with the highest payroll (For most camps it will likely be around June 2 - August 24, give or take 14 days). Multiply that by 0.902.
Depending on how you read the bill, you may not be able to get a PPP#2 unless you have used the full amount of PPP#1, so calculate what you can get forgiven and consider applying for that amount instead of the maximum amount. (It’s also not clear how strictly this will be interpreted /enforced by SBA & lenders or if it only applies to forgiveness).
The bill requires SBA to issue guidance on how to increase your loan within 17 days. This will be done through the bank that issued your loan. Contact your bank now to let them know you intend to have your loan recalculated.
If you have already received forgiveness, you likely will not be able to request a loan increase.
Definition of seasonal employer
Gross receipts during 6 months of off-season are not more than ⅓ of gross receipts during 6 months of in-season
More ways to forgive those loan funds.
This new bill expands the expenses that are entitled to forgiveness. If you are able to increase your loan, this will help you get more of it forgiven. It's not super clear what will meet the new criteria, so expect more specific guidance to come from SBA in January. Remember, 60% of all forgiven amounts must be spent on payroll and payroll expenses (like benefits and retirement contributions).
Forgiveable expenses now include:
Software and cloud computing costs: This likely includes your Campminder (or equivalent) fees, quickbooks or other accounting software fees, development software, HR software, and any other software subscription fees paid during the 24 week covered period.
Payroll processing fees
Capital costs related to:
HVAC and ventilation
Sneeze guards
Any purchase, renovation, or maintenance costs to comply with COVID-19 guidance from CDC, OSHA, or HHS. (This will likely get more specific guidance from SBA soon).
Any PPE purchased
Simplified forgiveness
If your loan is less than $150,000, you will not need to worry about documenting any of the forgivable expenses in your forgiveness application. It’s a simple form.