Paycheck Protection Program for Small Businesses Reopens
The Paycheck Protection Program (PPP) -- a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 crisis -- has reopened for new borrowers and certain existing PPP borrowers, the U.S. Small Business Administration (SBA) and Treasury Department announced.
To promote access to capital, initially only community financial institutions were able to make to make First Draw PPP Loans on Jan. 11, and Second Draw PPP Loans on Wednesday, Jan. 13. The PPP will open to all participating lenders shortly thereafter. This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.
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 percent reduction in gross receipts between comparable quarters in 2019 and 2020.