Next round of PPP loans now available
By Jenny LescohierJanuary 18, 2021
The Small Business Administration (SBA) and U.S. Treasury Department have reopened the expanded Paycheck Protection Program (PPP) for both new borrowers and for certain existing borrowers to apply for a second loan.
New regulations have been released for the forgivable PPP loan program, reopened on Jan. 11, as part of the $900-billion coronavirus relief package that was enacted into law at the end of December.
The deadline to apply for the new loan program is March 31, but applicants are encouraged to work with an SBA-approved lender as soon as possible.
Intended to help contractors and other businesses keep workers employed during the coronavirus pandemic, the Treasury press release said initially only community financial institutions, which include banks and credit unions that lend in low-income communities, will be able to initiate new PPP loan applications. The $284-billion in new funding will be open to all participating lenders shortly thereafter.
According to reports, the coronavirus rescue package provides relief for small businesses from loan forgiveness requirements and creates a “second draw” that allows small businesses to receive a second PPP loan of up to $2 million.
Key PPP updates include:
- PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
- The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
- The PPP provides greater flexibility for seasonal employees;
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
- A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
- Has no more than 300 employees; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” Secretary Steven T. Mnuchin said in a statement. “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by Covid-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” Administrator Jovita Carranza was quoted. “Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”
Rules can be found here:
Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act