Comic shop retailers and comics creators, if you have been looking for financial relief due to the pandemic, there are still two months for you to apply for the Payroll Protection Program (PPP). President Biden recently signed the PPP Extension Act of 2021. This legislation, put forward by the Senate, moves the original application deadline for the PPP loans from March 31 to May 31.
March also saw a change in the COVID Economic Injury Disaster Loan (EIDL). The max loan amount was raised, and current borrowers are eligible to take advantage of the higher limit. We’ll break down some of the need-to-know information and include helpful links at the bottom of this article.
PPP First Draw and Second Draw
What is PPP?
It is a loan designed to provide a direct incentive for small businesses to keep workers on the payroll.
The first round of PPP loans garnered criticism from the public. Impressions were that many large companies ended up with loans, and smaller businesses were left out. There have been some changes made to this second round that are meant to address these issues.
For comics creators, it will be good to know that the changes are making it easier for sole proprietors, independent contractors, and the self-employed to apply. There is a separate application for Schedule C filers and they have revised the funding formula to be more beneficial to those applicants.
The terms for the PPP are,
- 1% interest rate for First Draw Loans
- Loan forgiveness is available
- Deferment for 10 months after last covered date
- No collateral is required
- No small business fees
One of the major draws is that small businesses will receive loan forgiveness if they meet specific criteria. These criteria are the same regardless of applying for a First Draw or Second Draw PPP loan. The stipulations are,
- Employee and compensation levels are maintained
- Loan proceeds must be spent on payroll costs and other eligible expenses
- At least 60% is spent on payroll costs
Another benefit of the second round is the expansion of eligible expenses. The original eligible expenses included mortgage interest, rent, and utilities. This new round adds the eligible expenses — software, repair for property damage due to civil unrest, necessary business supplies, and COVID-related protections.
What is the EIDL?
EIDL is a long-term loan from the Small Business Administration (SBA) to help meet financial obligations and operating expenses that could have been met had the disaster not occurred.
EIDL is a loan for working capital and operating expenses open to small businesses and creators. It was recently announced on March 24, 2021, that the max loan amount has increased. If you have previously received an EIDL, you can request an increase. Additionally, if you have applied for or received a PPP loan, you can also apply for an EIDL.
The terms for the EIDL are,
- An interest rate of 3.75% for a business and 2.75% for a non-profit
- A 30-year payback
- Collateral for loans of $25,000 or more is required
- EIDLs are no longer forgivable loans
Both PPP and EIDL are available options to help with the economic strain caused by the pandemic. The extension of the deadline and some of the policy changes make these loans more accessible to smaller businesses, independent contractors, and the self-employed. If you are a comics retailer or creator who is in need of assistance, then this extension may be a good opportunity.
Payroll Protection Program (PPP)
- First Draw PPP Loan Details
- PPP First Draw Borrower Application Form
- First Draw Borrower Application Form for Schedule C Filers Using Gross Income
Second Draw (Those who have previously received a PPP loan.)
- Second Draw PPP Loan Details
- PPP Second Draw Borrower Application Form
- Second Draw Borrower Application Form for Schedule C Filers Using Gross Income
PPP Loan Forgiveness
Economic Injury Disaster Loan (EIDL)
Documents You’ll Need
(From Business Washington) FOR ALL APPLICATIONS THE FOLLOWING ITEMS MUST BE SUBMITTED. For your convenience, we have links to several of these documents so you can have the information gathered prior to going to the loan portal.
- Loan application (SBA Form 5), completed and signed (this is electronic/online in the portal) but is included here so you can see what information is asked prior to going to the portal.
- Tax Information Authorization (IRS Form 4506-T), completed and signed by each applicant, each principal owning 20 percent or more of the applicant business, each general partner or managing member; and, for any owner who has more than 50 percent ownership in an affiliate business. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management – Also attached here.
- Complete copies, including all schedules, of the most recently filed Federal income tax returns for the applicant business; an explanation if not available
- Personal Financial Statement (SBA Form 413) completed, signed, and dated by the applicant, each principal owning 20 percent or more of the applicant business, and each general partner or managing member
- Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used)
For more information on the SBA Coronavirus Disaster Loans, visit: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources