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Retired Military Finances 201: Round 2 of the Paycheck Protection Program. Here’s What Small Business Owners Need to Know

Managing Your Finances

Self-employed individuals and small businesses account for a significant portion of our country’s economy. During a global pandemic, like the one we’re experiencing now, small businesses suffer some of the hardest hits. Last March, the CARES Act allocated funding to support the U.S. economy and workers through the Coronavirus pandemic.

The legislation included a number of proposals aimed at supporting small businesses. For those hit hard due to forced closures and a sharp downturn in foot traffic, the PPP has served as a means to keeping doors open and employees paid. As we move forward in 2021, here’s where things stand with the PPP.

What Does the PPP Include?

The PPP is a forgivable loan program designed to encourage small businesses from laying off employees while staying afloat. It received an initial $350 million through the CARES Act and an additional $320 billion provided through the Enhancement Act. In December 2020, the program was injected with an additional $284 billion, offering small businesses another opportunity to receive loans.1 

Important aspects of the PPP include:2

  • A delay in employer-side payroll taxes for Social Security until 2021 and 2022. 
  • 50 percent refundable payroll tax credit on worker wages to incentivize businesses, including those with fewer than 500 employees, to retain their current workforce.
  • Sole proprietors and other self-employed workers may be eligible for the expanded unemployment insurance benefits the bill provides. 

How Does the Paycheck Protection Program Work?

First introduced under the CARES Act, the Small Business Administration (SBA) is currently overseeing the Paycheck Protection Program. This program distributed an initial $350 billion to businesses that met certain requirements, and the loans were made available to companies with 500 or fewer employees.3 The Paycheck Protection Program had allocated all of its funds to businesses within a few weeks of its initial launch. In response, the government replenished the fund with an additional $320 billion through the Paycheck Protection Program and Health Care Enhancement Act.2 

With the latest installment of funding for the PPP, businesses are able to receive loans of up to $2 million, and these loans will be administered by banks and other lenders. Additionally, the Paycheck Protection loans will carry a maximum interest rate of one percent.2 

Currently, the SBA guarantees small business loans that are distributed by a network of more than 800 lenders across the country. The program creates a form of emergency loan that has the potential to be forgiven when a certain percentage (depending on when you received your PPP loan) is used to maintain payroll.4 The program expands the network beyond the SBA so that more banks, credit unions and lenders can issue the appropriate loans. 

If your business uses the loan funds for the correct purposes and maintains the approved size of your full-time workforce based on when you received the loan, the principal loan will be forgiven, meaning you will only need to pay back the interest accrued.2 The primary purpose of these loans is to incentivize small businesses to refrain from laying off workers and ultimately rehire laid-off employees that have already lost jobs due to COVID-19. 

What Types of Businesses Are Eligible For The Paycheck Protection Program?

In 2021, the Paycheck Protection Program offers loans for small businesses, 501(c)(3) and 501(c)(6) organizations with fewer than 300 employees as well as some 501(c)(19) veteran organizations. Food service businesses are also eligible if they employ fewer than 300 people per physical location.4

Self-employed individuals, sole proprietors and freelance or gig economy workers are also eligible to apply for financial assistance during this time. Even without a personal guarantee or collateral, businesses that are struggling can receive a loan as long as they were operational on February 15, 2020.2

Eligible borrowers are required to make a good-faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19.

How Do I Get a Payroll Protection Loan?

The loan program provides loans through:2

  • SBA 7(a) lenders
  • Federally insured depository institutions
  • Federally insured credit unions
  • Participating Farm Credit System institutions

As a small business owner or self-employed individual, it’s always important to be aware of your options in prosperous times and those of hardship. With some assistance and the promise of keeping your workers employed, your small business can continue to thrive.


If you found this article useful, you might like the following blog posts:

Retired Military Finances 301: 4 Ways You Can Help Boost Your Employees’ Financial Security in 2021


Retired Military Finances 201: 6 Questions to Ask When Hiring a CPA for Your Business


Retired Military Finances: Selling a Business? 3 Common Valuation Methods to Determine Worth


  1. https://www.congress.gov/bill/116th-congress/house-bill/6395
  2. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program
  3. https://www.help.senate.gov/imo/media/doc/CARES%20Section-by-Section%20FINAL.PDF
  4. https://www.forbes.com/sites/allbusiness/2020/12/21/new-relief-package-provides-new-ppp-funding-for-small-businesses/?sh=3431e71b3092

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