The SBA’s Paycheck Protection Programs reopens on Monday, January 11.
After months of back-and-forth and stalemates, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act was signed into law by President Donald Trump on December 27, 2020. The Act authorizes an additional $284 billion in funding for the program which has already doled out 5.2 million loans worth $525 billion to small business across the country.
While the program reopens on Monday, the SBA will only accept loan applications from community financial institutions for the first two days (January 11-12). On Wednesday, January 13 Second Draw PPP Loans open with all participating lenders to follow shortly thereafter.
The SBA highlights several key changes that have been made for the second round of the PPP:
- 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, destination 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
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan
Borrowers can apply for a second draw PPP loan if the business:
- 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
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
The deadline to apply for the second round of PPP funding is March 31, 2021.
The first round of the PPP opened on April 3, 2020, running out of the initial $349 billion allotted to the program in less than two weeks. On April 24, 2020 President Trump signed a measure that allotted an additional $310 billion to the PPP program with applications reopening on April 27. The initial round of the PPP officially closed on August 8, 2020.