Two rounds of Paycheck Protection loans helped businesses stay afloat in Barron County and throughout the rest of the United States during the COVID-19 pandemic, according to local, state and federal sources.

However, the second round of PPP loans focused on businesses that weren’t nearly the size of first-round borrowers and who—at least in the opinion of some legislators—had fallen through the cracks.

From the start of this year and through the sign-up deadline of May 31, 2021, a host of individual entrepreneurs, farmers and self-employed workers were able to get PPP loans, according to Andrea N. Roebker, regional communications director for the U.S. Small Business Administration.

Roebker is responsible for the states of Wisconsin Illinois, Indiana, Michigan, Minnesota and Ohio.

Two SBA sources responded to a request for details about the latest round of loans, including Roebker and Luke Kempen, director of the Wisconsin Small Business Development Center at the University of Wisconsin-Eau Claire.

Roebker said the changes in PPP loan guidelines took effect Feb. 24, 2021. Over the next two weeks, “lenders could only submit PPP applications for small businesses and nonprofits with fewer than 20 employees,” she said.

In rural areas of the U.S., such as Barron County, that change, alone, accounted for a 12 percent increase in the number of small borrowers who went to local lenders in search of PPP loans, Roebker added.

The SBA was also ordered to revise the PPP funding formula “for sole proprietors, independent contractors, and eligible self-employed individuals,” she added.

That helped entrepreneurs who file Schedule C federal income tax forms. The Internal Revenue Service says Schedule C is used by people who are self-employed and need to report income (or loss of same) from the prior year.

“These borrowers (were allowed to use) the gross income line 7 on Schedule C of their IRS Form 1040, rather than the net profit line 31, to calculate their maximum PPP loan amount,” Roebker said.

In an area like Barron County (and, more specifically, the News-Shield circulation area), the rule changes were especially helpful, according to Kempen.

“For second-draw PPP loans, restaurants and certain other hard-hit business categories are eligible for an amount that is up to three and one-half times their monthly payroll, compared with two and one-half times for all other businesses,” he said.

“Farmers who file (IRS 1040 form) Schedule F can use ‘gross income’ instead of ‘net income’ to calculate the PPP loan amount for both a first or second PPP loan,” Kempen added.

The same rule went into effect March 3, 2021, for small business owners who file IRS Schedule C to report their income.

These people “are generally (the owners of) small businesses, sole proprietorships and LLC’s,” Kempen said.

Like the farmers, these business owners were allowed “to use the Schedule C ‘gross income’ instead of ‘net income’ to calculate the first and second draw PPP loan amount,” he said.

“Many small businesses that had a small net income in 2019—or a loss—and, therefore, could not get a PPP loan last year, are eligible for a significant PPP loan,” Kempen said.

Statistics from the U.S. Small Business Administration statistics say that, as of June 30, 2021, Wisconsin borrowers had taken out 191,901 paycheck protection loans, including the following loans/amounts: $150,000 or less, 174,540; $150,000-$350,000, 9,909; $350,000-$1 million, 5,326; $1 million-$2 million, 1,408; $2 million-$5 million, 611; and $5 million-$10 million, 94.