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What You Need to Know About Round 3 Of the Paycheck Protection Program (PPP)

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On Dec 27, 2020, the Consolidated Appropriations Act (CAA) was signed into law by then-President Donald Trump. This act was put into place in order to, among many other things, appropriate new funding for the Paycheck Protection Program (PPP).

The PPP has been lauded and criticized by people on both sides of the isle. Supporters note that businesses need to be kept afloat during a time when many workers are being laid off, whereas critics see it as a way for businesses to get large low-interest forgivable loans while still cutting their payroll. One thing is certain, though: the PPP provides funding for businesses that may not otherwise be able to pay employees still on their payroll, particularly if they’ve had to shut down or slow down their business activities.

In this article, you will learn about Round 3 of the Paycheck Protection Program, who qualifies for Round 3 of the PPP, and what you can expect.

History of the Paycheck Protection Program

The PPP was created in March 2020 by the CARES act and originally provisioned $349 billion in funding for business relief. This funding lasted only two weeks, expiring on April 16, 2020.

This program was highly popular and additional funding for the PPP was in high demand. As a result, H.R. 266 (otherwise known as the PPP and Health Care Enhancement Act) provisioned $310 billion in funding, was signed into law on April 24, 2020, and expired on August 8 of that year.

Round 3, which provisioned $284 billion in additional funding for the PPP, was signed into law on Dec 27 and is set to expire on March 31, 2021.

Who Qualifies for PPP Round 3?

In order to qualify for PPP Round 3, your business will need to have been in operation on or before February 15, 2020. This is to make sure that only businesses that have been affected by the pandemic are able to get funds.

PPP Round 3 applies to businesses with 500 or fewer employees, or if you’re getting a second draw loan, 300 or fewer. They also apply to businesses that are categorized as being “Accommodation or Food Services” and have 500 or fewer employees per location (300 if you need a second draw loan). This means that even if a business under Accommodation or Food Services has far more employees, they can still qualify if they have 500 or fewer employees per location.

Eligible entities are as follows:

  • Corporations that meet the eligibility criteria:
  • Independently owned franchises;
  • Self employed persons, contractors, and sole proprietors (includes gig workers);
  • Businesses or nonprofit organizations that are listed under 501(c)(3), 501(c)(19), or tribal businesses under 31(b)(2)(C);
  • Housing cooperatives;
  • Section 501(c)(6) organizations that meet the eligibility criteria
  • News organizations controlled by a business or nonprofit broadcasting entity categorized under NAICS code 511110 or 5151 that also meet the eligibility criteria

What Are The Terms Of PPP Loans?

PPP loans outlined in Round 3 are guaranteed by the government, require no collateral or personal guarantees, and have an interest rate of 1% per year. These loans mature after five years.

Your PPP loan must be used for payroll, mortgage interest, rent expense, or utilities. In this third round, you may choose your own covered period between 8 and 24 weeks, meaning expenses incurred in that period would be eligible to be paid for by the PPP loan.

100% of the PPP loan can be forgiven if you meet the following criteria:

  • 60% of your loan must be used for payroll
  • You must maintain AT LEAST the same number of employees on your payroll, with exceptions for employees that are provided with a rehiring offer but did not accept. Exceptions can also be made for employees that are fired with cause, resigned voluntarily, or asked for and received reduced hours
  • You must maintain at least 75% of total salary

You may also use your loans for:

  • Property damage not covered by insurance that was caused by various protests in 2020
  • Supplier costs that are essential to operations
  • Worker protection: expenses required to comply with CDC, HHS, OSHA or other government (state, local, or federal) guidelines
  • Operational expenses: these include:
    • business software (including cloud computing services);
    • Expenses required for product or service delivery
    • Expenses required for payroll management
    • HR and billing functions;
    • Expenses required to track supplies, inventory, records, and expenses

Expenses outside of these criteria are not eligible for forgiveness, however any eligible expenses can be forgiven. As a result, some businesses may find that they must pay back a portion of their loan as those expenses were found to be ineligible.

These terms apply to both first-draw and second-draw PPP loans.

What’s The Difference Between First-Draw and Second-Draw Loans?

If you’re getting your PPP loan for the first time, you’re taking what’s called a first-draw loan. First-draw loans can be provided for up to $10 million, whereas second-draw loans can be provided for up to $2 million.

If your business has more than $10 million in eligible expenses (or $2 million for second-draw loans), then only $10 million (or $2 million) can be covered by a PPP loan.

There are some other considerations for second-draw loans. You’re eligible for a second-draw loan if:

  • You’ve already used (or have planned the use of) all of the funds provided from your first-draw loan by the time you receive your second-draw loan;
  • Your business (or business location for Accommodation or Food Services businesses) has under 300 employees;
  • You have experienced a loss of at least 25% of gross receipts in one quarter in 2020 (compared to the same quarter in 2019), and you have demonstrable proof, AND
  • 100% of your first-draw loan went to eligible expenses

Even if you meet these requirements, you still may not be eligible for a second-draw loan. If your company:

  • Shut down permanently,
  • Exists for the purpose of political activities (including lobbying),
  • Is owned by an entity created or based in China (PRC) or Hong Kong, or has a board member who is a legal resident of China (PRC), AND/OR
  • Has received a shuttered venue operator grant (Section 24 of the CAA),

…then it is not eligible for a second-draw PPP loan under any circumstances.

How Can I Apply For A Round 3 PPP Loan?

The Small Business Association (SBA) is offering first and second draw PPP loans. They have a free online tool called Lender Match to help you find an eligible lender for your PPP loan. This tool is not to be used for EIDL loans. It will take around 2 days to be matched with a lender.

Beware of scammers who may pose as eligible lenders to try and get your information! Only use the Lender Match site on the official SBA.gov website!

Learn more about the application process for a Round 3 PPP loan here!

Summary

What You Need to Know About Round 3 Of the Paycheck Protection Program (PPP)

Article Name

What You Need to Know About Round 3 Of the Paycheck Protection Program (PPP)

Description

In this article, you will learn about Round 3 of the Paycheck Protection Program, who qualifies for Round 3 of the PPP, and what you can expect.

Author

Jason M. Kaplan, Esq.

Publisher Name

The Credit Pros

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Credit Repair

Is it Advisable to Pay Off Collection Items?

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Pay off collection items

The majority of consumers appear to believe that if they pay off collections, their credit scores will improve and become better. A shocking truth has emerged: this is not actually the case. Just so you’re aware, negative items can remain on your credit reports for a maximum of seven years, and your credit score will only begin to improve once the negative item has been removed.

What are Collection Accounts and How Do They Work?

Collection accounts are entries on a credit report that indicate that a debtor has fallen behind on previous obligations. Original creditors may have sold the defaulted debts to a debt buyer or may have assigned the debts to collection agencies after the default occurred. It should come as no surprise that the collector’s ultimate goal is to work on the client’s behalf in order to have the defaulted debt collected from the debtor or as much of it as possible.

The majority of the time, these collection accounts are reported to credit reporting agencies. According to the FCRA, or Fair Credit Reporting Act, these are permitted to remain on credit reports for up to seven years from the date of the initial debt’s first delinquency.

The Consequences of Paying Off Collections on Your Credit Score

The ramifications of completely paying off collection accounts will not disappear in an instant, however. You will still need to wait until the statute of limitations has expired before this information can be removed from your credit report. As previously stated, this will typically take approximately seven years. Fortunately, information from the past will have a smaller impact on your credit score.

Despite the fact that paying off collections will not improve your credit score, there are several ways in which you can take advantage of this situation:

Credit card or medical bills can result in debt collection lawsuits, which you can avoid if you take the proper steps.

As a result, you will be able to avoid paying interest fees to debt collectors. A debt collector is constantly selling and buying accounts, and he or she may continue to charge you fees and interest on the accounts that have been purchased.

In the event of a settlement or payment in full, the credit report will reflect this. When it comes to lenders, it can have a positive impact because they are likely looking beyond your credit score and instead of looking at your credit history and other factors. Comparing those who successfully repay an extremely past due account to those who never managed to do so, the former will demonstrate greater financial responsibility.

You will eventually be able to benefit from the most recent FICO Score model. Despite the fact that the FICO 9 is still in the early stages of implementation, the vast majority of lenders will eventually adopt it. Medical bills will be given less weight in this model, and paid accounts will be completely ignored when it comes to collections.

According to the law, the majority of negative credit information, such as collections, should be removed from credit reports over time. The fact remains that attempting to settle or pay off your debt as quickly as possible will be in your best interests. Not to mention the fact that, in contrast to older models, the newer models for credit scoring do not take into consideration collections with zero balances. If you don’t think you’ll be able to handle it on your own, you can always enlist the assistance of professionals who can simplify the entire process for you.

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How Bad is an Eviction and How Long Does it Stay on Your Credit?

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eviction on your credit report

Every time someone mentions a record during an eviction, what they are really referring to is a background check as well as your credit report and history. In general, an eviction will appear on your credit report for up to seven years.

That is correct; you read that correctly. It will be there not for 7 months, but for as long as 7 years, according to some estimates. Eviction is, therefore, a major issue in this community, and it is treated as such. Landlords, in particular, are wary of renting to tenants who have a history of evictions on their records. If you are ever evicted, this fact will follow you wherever you go for the next seven years, no matter how hard you try to forget it.

For landlords to know that you have been evicted in the past, there are two ways to find out.

If the reason for your eviction was non-payment of rent, your landlord may have forwarded this account to a collection agency, which will then appear on your credit report as a result of your actions.

When the courts were involved in your eviction, the case judgment is considered public record, and landlords who use tenant-screening services will be able to see this information if they conduct a background check on the tenant in question.

Is it possible to have an eviction removed from your credit report?

Anything that is accurate on your credit report will remain on your report for seven years. If there is ever a mistake, you will have the opportunity to contest the decision.

This error will be removed from your credit report if you can provide proof to the credit reporting agency that a mistake was made. If you were successful after being served with an eviction notice, you should provide proof of your victory to the reporting agency. There are landlords who will attempt to evict people even if they do not have a legitimate or acceptable reason to do so.

How Can You Find a Place to Rent if You Have an Eviction on Your Credit Report?

It is important to understand that just because you have an eviction on your credit report does not necessarily mean that you will be unable to rent for the next seven years. However, even though your report contains an eviction, there are still several options available to you for finding a place to live in the meantime.

Take the initiative.

Inform the property manager or landlord of your intention to evict them prior to submitting your application and explain your circumstances to them. Even if the eviction took place years ago and you have maintained a good tenant record since then, there is a chance that the landlord will rent to you again.

Look for someone who will sign on as a cosigner for you.

It is possible for you to obtain a rental unit if you have a co-signer who has good credit and can vouch for you. Your parent or another person with good credit can serve as your co-signer. If, on the other hand, a payment is not made on time, your landlord has the right to and will almost certainly ask for the money from your cosigner.

Pay in advance if possible.

A high probability of obtaining a rental unit exists if the landlord recognizes your willingness to pay the rental value in full upfront for a period of 3 to 6 months.

What’s the bottom line?

It is preferable to avoid being evicted in the first place if you want to avoid having any eviction information on your credit report.

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Why did House Prices Go Up in 2020 During the Pandemic

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The pandemic brought with it a lot of surprises, one of them being the rise in house prices. The US economy plummeted with millions of Americans finding themselves out of work and without food. No one would have predicted that at the time when times were hard for everyone, home prices would become overheated, mortgage rates would skyrocket, and the supply for houses would not meet the demands and consumer confidence in the housing market was reducing. The housing market was booming.

Right at the beginning of the pandemic, no one was willing to buy a house or even sell one. This was because of the uncertainties of the time brought about by Covid-19. In a span of a few months, most day-to-day activities were confined to the available properties. Houses became a key asset and prices began to rise.

The US real estate market in context

The American real estate market suffered a huge blow as a result of the 2008 financial crisis. The recession saw the prices of houses fall by a big margin and the world’s largest real estate market was affected in ways no one would have imagined. This was as a result of subprime mortgages that were given in large numbers to help as many Americans as possible to become homeowners. Homeowners found themselves mortgages that were higher than the value of their houses. By 2013, the market was showing signs of recovery. From 2018 to 2019, the market began to fall slightly.

For many Americans, owning a home is very important to them as it allows them to build up their wealth, make it easy for them to access credit, and be able to save more as they no longer have to pay rent. A large percentage of homeowners rely on mortgages to acquire homes after raising the down payment from their savings or with money from their families. It was expected that the pandemic would lead to foreclosures especially since the economy took a downward spiral at the start of the pandemic. Many people also lost their source of income and were unable to keep up with their mortgage payments.

The most expensive real estate in the USA is found in San Francisco, California. San Francisco has a booming economy fueled by the presence of tech companies like Apple, Facebook, Intel, and Tesla that have their headquarters in the nearby Silicon Valley. The city also has been at the forefront in matters progressive culture which attracts more people to relocate to it. As a result of the thriving tech economy that brings billions of dollars into the city, and rising housing demand, the city is the most expensive place to buy a house in the US. On average, the price per square foot is $1,100.

Why do house prices go up in general?

The value of a house is usually expected to depend on the demand for living in a particular area, but things like recessions and pandemics are known to have an impact that can either be positive or negative. House prices go up when the supply does not meet the demand. One of the key factors that affect the supply has to do with the regulations that restrict the number of housing units that can be built. For example in a single-family zone, it’s illegal to build townhouses or apartments, or condos on any spaces designated for single units and parking minimums must be met. This forces contractors to make provisions for parking spaces even in places where it’s unwarranted.

Some local governments allow groups of people to block developments they feel will have a negative impact on the overall value of the entire estate. These local zoning regulations are making it impossible for most Americans to move to better estates due to the shortage of housing.

Why did house prices go up during the pandemic?

The price for houses is determined by the existing demand and supply dynamics. The fewer the number of houses available, the higher the prices for the available units would be. If the number of buyers is fewer, then the house prices would be lower. The prices went up because the pandemic affected both supply and demand. A lot of people were in a rush to take advantage of the falling mortgage rates which made it easier to acquire homes at a cheaper price.

As a result of the falling mortgage rates, houses were not staying on the market for long. Among those who bought the homes were first-time homebuyers or those who were buying a second home. These put a lot of pressure on the market as were not putting another home on the market as they took one out of it. In some instances, others chose to refinance their mortgages based on the lower rates instead of acquiring a new home.

Because of the pandemic, people who had plans of listing their homes did not do so and those who had listed their homes took them off the market. As a result of the social distancing rules at the height of the pandemic, not many people were willing to show their houses.

Home developers did not anticipate a surge in the demand for housing during the pandemic. A number of them had let go of their employees and had shut down. At the same time, prices for materials like lumber also added to the construction costs alongside the scarcity of skilled workers.

Summary

Why did House Prices Go Up in 2020 During the Pandemic

Article Name

Why did House Prices Go Up in 2020 During the Pandemic

Description

The pandemic brought with it a lot of surprises, one of them being the rise in house prices. Read why did house prices go up in 2020 during the pandemic.

Author

Jason M. Kaplan, Esq.

Publisher Name

The Credit Pros

Publisher Logo

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