More on PPP 2.0

Welcome to this week’s installment on raising capital! Head over to our Youtube channel, and take a look at this article from Forbes to learn more.

Let’s talk more about what they’re calling “the second draw” PPP loan. On December 27th, Congress passed a another COVID-19 relief bill, and there were some additional funds in there for doing a PPP 2.0, as we like to call it. We just talked about this last week, but we think it’s critically important to keep talking about its importance.

We had a conversation with a friend of HGC last week whose business has been hit tremendously hard by the pandemic. At first there was the lock down, and they had to shutter the business for eight weeks. Once they were able to get back open, he and his wife both got the virus, and they had to shutter the business again for another two or three weeks. It’s been tremendously challenging them, so we asked, “Did you get a PPP loan?” The answer was, “No, we talked to our banker, and it didn’t really seem like it fit. What are you talking about?” Harvard Grace helped many people get their PPP loans last year, doing the calculations for them and with them. We told this friend of HGC that they now have another chance, because if you’ve not gotten the first PPP loan you can apply for that one as well when you apply for PPP 2.0.

The the main difference between the two loans is that to qualify for the second one, you need to demonstrate a 25 percent reduction of revenue from any quarter in 2020 to another quarter in 2020. How is that calculated? It’s not done on profits. It’s not done on margins. It’s done based on gross revenues. Let’s say in Q1 of last year, you calculated all of your gross revenues. That’s payments from customers, interest dividends, or however you make money. Then you go to Q2, and you see how much lower the revenue was, and you calculate the percentage difference with Q1. You need to show a 25 percent reduction. Here’s a clue: if, in any one of the quarters, you collected a large contract payment, you might want to use that as your base quarter in your calculations.

Why talk about this in the “raising capital” segment? If you’re raising capital for your company, you can borrow money or you can raise equity from investors or yourself. But PPP loans are, in fact, free money, assuming that they get forgiven, and they’ve already been forgiven in the hundreds of thousands. So if you’re looking for capital, and you’ve not pursued PPP, we highly encourage you to look into this. There’s still money out there on the new and original PPP programs.

If we can help you with this, let us know. We’ve helped dozens of clients get their PPP loans, and we’d love to help you too.

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