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12 n e w h a v e n B I Z | F e b r u a r y 2 0 2 1 | n e w h a v e n b i z . c o m By Natalie Missakian New Haven's Claire's Corner Copia has seen a significant drop off in customer traffic amid the COVID-19 pandemic, forcing owner Claire Criscuolo (above) to apply for a second round of Paycheck Protection Program funding to stay open. Financial Lifeline C laire Criscuolo hasn't laid off a single employee in 45 years serving up fresh, organic meals and tasty desserts at Claire's Corner Copia, her iconic veg- etarian eatery at the corner of College and Chapel streets. So when the coronavirus forced her to temporarily shut the doors last March, sending her finances into a tailspin, Criscu- olo made herself a promise. "If I have to lay people off, I'm shutting down. I'm not going to choose," the long- time restaurateur told herself. "It's either all of us, or none of us." She said the federal Paycheck Protection Program loan she received in early May was "a godsend" that saved her from having to make that choice. Now, with that money long spent and customers few and far between because of the pandemic, Criscuolo is applying for a second loan that she hopes will get the restaurant through winter and into spring. "Which is perfect because by then we'll be able to eat outside again. Our capacity will basically be doubled," she said. Criscuolo is one of millions of struggling small business owners around the state and nation that are expected to take advantage of the latest round of PPP funding, which the U.S. Small Business Administration and Treasury Department made available in January. Applications are open through March 31 for the next wave of loans available under the pro- gram. Businesses with 500 or fewer employees that didn't get a loan last year can borrow up to $10 million. And businesses that have spent the money from their initial loan can apply for a "second draw" of up to $2 million, as long as they have fewer than 300 employees and can show a 25 percent decline in gross receipts. It's a threshold Criscuolo says she'll easily meet. While this new round of PPP funding likely won't get as many takers as it did last spring and summer, Connecticut businesses were very active in drawing on the funds last year. In fact, through Aug. 2020, 64,629 busi- nesses in the state received $6.7 billion in PPP loans, which are potentially forgivable if borrowers meet certain guidelines in how they spend the money. Tips from the experts So what do businesses taking out a sec- ond loan need to know? Michael Maksymiw Jr., a CPA and partner with accounting and advisory firm Marcum LLC, said the most common ques- tion he gets from clients is how to show the required 25 percent drop in gross receipts. He said businesses should use the same accounting method they use on their tax return. "Most of these businesses file on a cash basis. So they can look at their 2020 tax return compared to their 2019 return," he said. Since all revenue that a business brings in — sales, interest, dividends, commissions — count as gross receipts, he said looking at bank statements from comparable quarters is another easy way to see if a business is eligible for a second loan. "Grab April, May and June for 2020 and add the deposits. Grab April, May and June for 2019 and add the deposits," he said. "If you've got a 25 percent decrease, that's good. at means you can qualify." What hasn't changed from the first PPP loan is how the loan amount is calculated. It's based on payroll expenses, and busi- nesses may use payroll from 2019, 2020 or the last 12 months, whichever is largest, Maksymiw said. Businesses can still borrow up to 2.5 times their average monthly payroll costs, but now restaurants and hotels can borrow up to 3.5 times their monthly payroll. (Salaries are limited to $100,000 a year.) Like last time, the federal government will fully forgive the loans as long as the money is used for allowable purposes. Businesses still must spend 60 percent of the proceeds on payroll costs, but Congress built more flexibility into the program by expanding what can be included in the remaining 40 percent, said Stephanie Cummings, an attorney with Carmody, Torrance, Sandak & Hennessey. "And that's a great thing for businesses," she said. "It just gives them the opportunity to prioritize what needs to be done and decide what's right for them." For example, companies can now use their PPP loan to pay for personal protective equipment, plexiglass sneeze guards, air fil- tration systems and other expenses incurred to meet COVID guidelines. "If you expanded your physical footprint into the parking lot [to allow for outdoor restaurant seating], you can use that PPP money to pay for that," Cummings said. "ese are huge expenses for a small busi- ness that they weren't anticipating." Unlike typical financing applications, banks won't be doing any vetting, so it's wise for businesses to consult an attorney or ac- countant to make sure their business meets all of the loan's qualifications, she said. Smoother rollout e latest round addresses criticism that too many loans last spring went to large companies, squeezing out some of the smallest and most vulnerable businesses. is time, $15 million is set aside for PPP loan forgiveness guidelines What's most attractive about the federal government's Paycheck Protection Program is the possibility that loans can be forgiven if borrowers meet certain criteria in how they spend the money. Here's some guidance: First and second draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered loan period: • Employee and compensation levels are maintained. • The loan proceeds are spent on payroll costs and other eligible expenses like mortgage interest, rent and utilities. • At least 60 percent of the proceeds are spent on payroll costs. Many New Haven area small businesses look to new round of PPP funding for survival Stephanie Cummings Michael Maksymiw Jr. PHOTOS | CONTRIBUTED

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