PPP loan guide for pet shops, groomers, services (2021 rules)

In this 7-minute read:

  • Do pet shop owners, groomers, and other pet services businesses qualify for PPP loans? 
  • 2021 rules updates that can make a huge difference for pet businesses
  • How can pet service businesses calculate their max PPP loan?
  • Spending your PPP funds to receive loans forgiveness
  • How to get your PPP loan forgiven

Your pet service business, whether you’re an independent groomer, pet shop owner, veterinarian, or something else entirely may be able receive forgivable federal PPP funding to help with business operations. 

The Paycheck Protection Program allows even more businesses to get financial assistance to help with the hardships that have come with COVID-19.  

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PPP eligibility requirements for pet services, pet shop owners, dog groomers, and more

You must meet certain eligibility requirements if you wish to apply for PPP funding. The first requirement is that you must be a small business owner, independent contractor, sole proprietor, or otherwise eligible self-employed individual. You need to be able to verify your employment status with your tax documentation too. For most self-employed individuals, this will typically your IRS Form 1040 (Schedule C). Some lenders may let you apply with a 1099, but most lenders will require a copy of your 2019 or 2020 Schedule C. If you haven’t filed your 2020 taxes yet, fill out the form and do the calculations, as you’ll need them (and your lender will likely require a verified copy of your 1040 Schedule C, even if you haven’t filed yet). 

If you are employed by a pet shop, groomer, vet, or other pet service business and you earn a W2 from that job, then you can’t apply for the PPP loan with your W2 job. But, if you have your own independent contract work on the side or another side gig or business that you own, you may qualify for the PPP loan with that job (again, only if you have the tax documentation to back it up, and only if you were in business before February 15, 2020. 

For the first draw PPP loan (your first PPP loan), you also meet the minimum earning threshold of $4800 in revenue in either 2019 or 2020. Learn why you need to have at least $4800 in revenue to qualify for a PPP loan

For the second draw PPP loan, you must have already received a PPP loan and spent it correctly on authorized expenses before you receive the funds from your second draw disbursement, AND you must be able to demonstrate a revenue reduction of 25% or more when comparing any quarter in 2020 to 2019. (You also must have fewer than 300 employees, which for most groomers and pet services businesses is not an issue.) 

For more information about eligibility requirements and any special circumstances that may apply, check out our PPP FAQ

Pet services, groomers, pet stores, etc.: You may qualify for more PPP funding due to these 2021 updates

In February 2021, the Biden-Harris administration amended the PPP loan rules to allow even more businesses to qualify for the PPP loan and to help 1040 Schedule C borrowers get even more of these vital relief funds. 

  • 1040 Schedule C borrowers can now elect to use their gross (instead of net) profits to calculate their maximum loan amount. This can help push many individuals over that minimum earning threshold and allows these individuals to apply for a larger loan
  • Previously, if an owner of a business was delinquent on their student loan payments, they were ineligible. That rule has been lifted so these individuals can now apply for the loan
  • Non-citizen borrowers can now apply for the loan so long as they are lawful residents paying taxes using their ITIN

How can pet stores, pet services businesses, and groomers calculate their max PPP loan?

It’s important to be aware of the maximum loan amount that your pet business can borrow so that you can accurately plan how to spend those funds and receive loan forgiveness. 

If you are self-employed and don’t have any employees, you will likely use this calculation:

  1. Acquire your 2019 or 2020 IRS 1040 Schedule C and get the number for your gross profits (line 7). You can choose which year to use (and as noted earlier, you may elect to use either your gross or net income… though the vast majority will find their gross income to produce the largest possible PPP loan amount). If the number on line 7 exceeds $100,000, then reduce it to $100,000.
  2. Take your number from step 1 and divide it by 12 to get your average monthly profit/income. 
  3. Multiply your average monthly profit by 2.5 to get your max PPP loan amount. 
  4. Bonus: if you received an EIDL (Economic Injury Disaster Loan) due to COVID-19, you may add any outstanding amount of the loan made between January 31, 2020 and April 3, 2020 to your maximum loan amount. (Don’t add any “advance” you received on that loan, as that advance doesn’t have to be repaid.)

If you have employees, you’ll need to calculate your PPP loan amount a little different to account for their pay:

  1. Pull together your total payroll costs (including your own income). This process may vary depending on how your business is set up. Your lender can help you here if you need it. 
  2. Take your number from step 1 and divide it by 12 to get your average monthly payroll costs. 
  3. Multiply your average monthly payroll costs by 2.5 to get your max loan amount. 
  4. If you received the EIDL, you may add any outstanding amount of that loan made between January 31, 2020 and April 3, 2020 to your maximum loan amount. (Again, don’t add any “advance” you received on that loan.)

For more information on calculating your maximum loan amount for a first draw loan, visit our PPP FAQ

Spending your PPP funds correctly helps ensure you are eligible to apply for full loan forgiveness

In order to receive full forgiveness on your PPP loan, you’ll need to spend your funds on specific, approved expenses (though the SBA is pretty generous on this). We’ve outlined the expenses for which pet service businesses can use their PPP funds. 

Payroll and income

By law, you’ll need to spend at least 60% of your PPP funds on payroll costs to achieve full loan forgiveness. If you have employees, that 60% needs to go towards their income (and your own) and helping keep your employees on staff as well as maintaining their current compensation levels. 

If you don’t have any employees, you can use this portion of the loan (and even up to 100% of your PPP funding) to pay your own income. This is perfectly legal according to the PPP rules.

Other approved business expenses

The other (up to) 40% of the PPP loan can be used on the following business expenses that you may have:

  • Mortgage, rent, utilities: any payments for these items that relate to your pet service business. If you work out of your home, you can use your PPP loan to help pay any portion of these costs that you would deduct from your business taxes
  • Interest payments on debts: any interest payments on debts related to your pet services business (credit cards, business loan, equipment financing, etc.)
  • Costs for operations: any costs associated with business software or cloud computing services that help facilitate essential business operations (accounting, inventory tracking, payment processing, product or service delivery, or other sales and billing functions)
  • Supplier costs: any costs for supplier contract or purchase orders that were in place before the first day of your covered loan period
  • Worker/customer protection: any costs associated with adhering to public health guidelines for social distancing and limiting the spread of COVID-19 (PPE, cleaning supplies, sneeze guards, and business expansions)
  • Property damages: any property damage costs that occurred during the 2020 riots and weren’t covered by insurance

As you plan and spend your PPP funds, be sure to keep good records of how they were spent so that you can receive loan forgiveness. 

Check this out: Tracking PPP expenses to maintain forgiveness (tools and tips!) 

How and when to apply for PPP loan forgiveness

You can apply for loan forgiveness when your covered loan period is over (and you’ve spent your PPP funds on approved uses). You’ll have within 10 months of the last day of your covered loan period to apply for loan forgiveness. 

To apply for loan forgiveness, you should first check if your lender has opted-in to the new SBA PPP Direct Forgiveness Portal. If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.

If the above doesn’t apply to you, contact your PPP lender and complete the correct application form:

  1. Ask your lender for the correct forgiveness application. There are multiple applications, so they’ll make sure you have the right one. Check out our instruction guide: PPP forgiveness application instructions for loans over $150,000 (forms 3508 and 3508EZ), and our instruction guide for PPP loan forgiveness Form 3508S (loans under $150K)
  2. Fill out your application and gather any documentation you’ll need to verify where your funds went (invoices, receipts, cancelled checks, bank statements, etc.). NOTE: most lenders now use electronic systems to complete PPP applications and forgiveness forms, so be sure to talk to your lender and follow their processes.
  3. Turn everything in to your lender and they will then process it and submit your application to the SBA for approval. 
  4. Wait to hear from your lender on the decision once it has been made. Your lender is responsible for all communication on your PPP loan, and they will notify you of your forgiveness status. Once your loan is approved for forgiveness, you don’t ever have to pay it back!

Learn more about PPP loan forgiveness:

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