Next round of aid program reopens for small businesses

Posted

WASHINGTON, D.C. —  The federal Small
Business Administration and the U.S. Treasury Department has announced that the
Paycheck Protection Program (PPP) re-opened on
Monday for new borrowers and certain existing PPP
borrowers.

To promote access to the funding, initially only community financial institutions werre able to make First Draw PPP Loans on Monday with Second Draw PPP Loans starting on Wednesday, Jan 13, the SBA announced. The PPP will then open to all participating lenders shortly thereafter.

Updated PPP guidance outlining changes to enhance its effectiveness and accessibility has also been released and is available online at www.sba.gov/ppp or treasury.gov/cares.

The new round of the PPP authorizes 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.

“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,” said Treasury Secretary Steven T. Mnuchin.

“This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19,” Mnuchin added.

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,
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 Loans; 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.

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