Second round of PPP applications opens

Plus: Paycheck Protection Program —What you need to know

By , Special to the Daily Memphian Updated: January 18, 2021 4:00 AM CT | Published: January 18, 2021 4:00 AM CT

When Miles Tamboli opened his Midtown restaurant, Tamboli’s Pasta & Pizza, in November 2019, he had no idea what the next year would hold for him and his business.

“We were dine-in only for those first five months,” he said.

Tamboli quickly pivoted his business model in March when restaurants were closed under “Safer at Home” COVID-19 orders, offering takeout, curbside pickup and delivery.

He also turned part of his business into a small grocery store, which he said helped him get through the first few months of the pandemic.

“I was a farmer before I started the restaurant,” Tamboli said. “My friends are people who make food. It was pretty easy to get that food into the restaurant to distribute out and make up for a bit of what folks weren’t able to get at the grocery store.”

To help sustain the business, Tamboli took advantage of the first round of Paycheck Protection Program (PPP) funds, which was the “right amount” for eight weeks of payroll.

However, the pandemic lasted much longer than he anticipated.

“I have a degree in public health, which I thought I would never use,” he said. “Turns out, it was a pretty great thing for our current circumstances.”

Tamboli spent 100% of PPP funds on payroll and is confident the loan will be forgiven.

“It was not quite enough to really cover everything, but it was enough to cover us from going out of business.”

As the next round of PPP relief opens for applications, Tamboli plans to apply and use the funds to keep his staff employed. Originally, Tamboli employed 35-36 people and is now down to around 20.

“We have new staff who were in a really tough financial situation before they found a job, and it makes me queasy to think about what could happen if things went south financially,” he said. “Our philosophy is to take care of our people, keep them healthy and keep them paid.”

Rory Thomas is executive director of the Tennessee Small Business Development Center located at Southwest Tennessee Community College. Such satellite offices located throughout the U.S. are the Small Business Administration’s (SBA) largest providers of resources. There are 14 across the state of Tennessee.

“This (the PPP funds) is another lifeline for a lot of small businesses going into 2021, especially with different industries that have had to close their doors or limit their capacity,” Thomas said.

Some major changes in the Second Draw of PPP funds include the following:

  • Borrowers can set their coverage period to spend PPP funds from eight to 24 weeks;
  • PPP loans can cover additional expenses besides payroll, including operations expenses, property damage costs, supplier costs and worker protection expenditures;
  • Eligibility is expanded to include 501(c)(6) entities such as chambers of commerce, housing cooperatives, direct marketing organizations and others;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP loan amount;
  • And certain existing PPP borrowers are now eligible to apply for a Second Draw PPP loan.
  • Another change, according to Thomas, is that businesses need to have experienced a 25% revenue drop from any quarter of 2019 compared to the same quarter in 2020 if they are applying for a second time or for additional loan funds. The First Draw of PPP did not require any evidence of reduced revenue or decline in sales.
  • Also, if the PPP loan application amount is under $150,000, businesses only need to “self-certify.” “If it’s over $150,000, you have to provide evidence to SBA via tax returns and other documents,” Thomas said.

Thomas’ office also handles Economic Injury Disaster Loans (EIDL) and NEED grants authorized by the Economic Development Growth Engine for Memphis and Shelby County (EDGE).

Since the pandemic hit, his staff has been inundated, providing resources to more than 1,100 businesses.

PPP loans offset COVID-19 losses for small businesses

Daphnie Swift, president of A Cut Above Lawn Service Corp., took part in the first round of the PPP and is looking forward to applying for the second draw.

“It (PPP) helped with payroll and with the new requirements in just trying to ensure the safety of everyone,” she said. “We have to secure masks and sanitizer and ensure the trucks are sanitized daily.”

She said her business lost $85,000 to $90,000 in revenue in 2020 due to COVID-19. Part was caused by the season being delayed due to business closures as well as losing a contract with the City of Memphis, which was canceled due to safety concerns.

Earlier last week, SBA granted dedicated PPP access to Community Financial Institutions (CFIs), which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries as part of the agency’s ongoing efforts to reach underserved and minority small businesses.

PPP applications opened for small lenders on Friday, Jan. 15 and opens to all lenders Tuesday, Jan. 19.

<strong>Sean Henneberger&nbsp;</strong>

Sean Henneberger 

Sean Henneberger with Pinnacle Financial Partners, which processed about $2.4 billion in First Draw PPP loans to 14,000 clients, said that the bank is “all in” when it comes to helping customers, although all the details have not been solidified.

“I think it’s going to be similar to these conversations we had with the first round of PPP — I think it’s going to continue to evolve,” Henneberger said. “As a bank and lender, we’re just trying to provide the information as we have it.

“It’s kind of like that first wave (of PPP), there was a lot of speculation on what it would look like, and then things changed more or less last minute. At this point, it’s kind of a waiting game,” Henneberger said. “The proposed bill is out there that passed, but there’s some fine tuning that needs to happen.”

PPP Loans: What you need to know

SBA will forgive Paycheck Protection Program loans if all employee retention criteria are met, and the funds are used for eligible expenses.

First Draw PPP loan parameters for businesses that have not applied for a PPP loan before:

The maximum amount of money you can borrow is equal to 2.5 times your average monthly payroll costs or $10 million, whichever is lower.

PPP loans have an interest rate of 1%.

Loans issued prior to June 5, 2020 have a maturity of two years. Loans issued after June 5, 2020 have a maturity of five years.

Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).

No collateral or personal guarantees are required.

Neither the government nor lenders will charge small businesses any fees.

Who may qualify

 Sole proprietors, independent contractors, and self-employed persons;

Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard);

Any business, 501(c)(3) nonprofit organization, 501(c)(19) veterans’ organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of: 500 employees, or that meets the SBA industry size standard if more than 500;

Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location.

Second Draw PPP loan parameters for businesses that have already received an earlier PPP loan:

For most borrowers, the maximum loan amount of a Second Draw PPP loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (use NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

Who may qualify

 A borrower is generally eligible for a Second Draw PPP loan if the borrower: 

Previously received a First Draw PPP loan and will or has used the full amount only for authorized uses;

Has no more than 300 employees;

And can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Source: U.S. Small Business Administration


Tamboli’s Pasta & Pizza coronavirus Pinnacle Financial Partners A Cut Above Lawn Service Corp. Daphnie Swift Paycheck Protection Program PPP funds
Christin Yates

Christin Yates

Christin Yates is a native Memphian who has worked in PR and copywriting since 2007. She earned her B.S. in public relations and M.S. in mass communications from Murray State University.


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