The U.S. Small Business Administration (SBA) has opened a new, multi-billion-dollar round of small business forgivable loans (PPP2), and Detroit business owners are encouraged to submit applications before the March 31 deadline.
“This new round of the SBA’s Paycheck Protection Program has millions of dollars available for our small businesses, particularly women- and minority-owned businesses,” said Detroit Mayor Mike Duggan. “This may be the last opportunity to receive this type of significant help from the federal government so business owners should get their application started at detroitmeansbusiness.org.”
The Paycheck Protection Program, a forgivable loan designed to help struggling small businesses keep employees on their payroll through the COVID-19 pandemic, has already helped thousands of Detroit small businesses. A total of $647 million in loans was distributed to 5,412 Detroit businesses during the first round. An estimated 58,000 Detroit jobs were retained as a result. Round two of the program opened Jan. 11 and includes $284 billion for small business loans — $60 billion of which is targeted to businesses that did not receive a loan in the first round. Individual loans of up to $2 million are available to eligible businesses at one percent interest to be paid back over 30 years. The application period closes March 31, 2021.
According to the SBA, PPP2 provides greater flexibility for how borrowers may use funds and allows for businesses that already received a PPP loan to be able to take advantage of a new round of “second draw” funding. It also includes provisions to support truly hard-hit small businesses such as restaurants and hotels.
Kai Bowman, vice president of Detroit Means Business, said the application process can be intimidating to some, so his organization is standing by to help.
“The City of Detroit, through Detroit Means Business, is providing small business owners with individual, personalized application support,” said Bowman. “While the SBA has simplified the process, we know that completing the forms can be challenging. We want every Detroit business owner to have a great shot at getting this loan.”
Business owners can access a variety of assistance through Detroit Means Business. PPP loan application support is available through a network of trained national MBA students called The MBA Response; graduate accounting students from the University of Michigan are available to assist business owners prepare financial documents; and legal experts through the Michigan Community Resource’s Virtual Legal Clinic are available for consultations.
PPP was introduced in 2020 as part of the U.S. CARES Act, which awarded eligible businesses loans of up to $10 million on favorable terms. This includes total forgiveness in the event businesses can maintain or restore their payroll, essentially converting the loan into a government grant.
Unfortunately, not enough Detroit businesses are taking advantage of PPP2, said Kevin Johnson, DEGC president and CEO.
“This is a tremendous second opportunity for eligible businesses to obtain a forgivable loan,” said Johnson. “The current rate of applications is lower than expected. There’s a lot of money out there to help our local business community, but they need to apply.”
To learn more about PPP2 and apply for free assistance, go to Detroitmeansbusiness.org.