The Small Business Administration and the U.S. Department of the Treasury recently announced a second round of Paycheck Protection Program loans will begin for new and certain existing borrowers later this month.
The First Draw of PPP loans will be distributed to qualifying borrowers through community financial institutions on Monday, Jan. 11, with the Second Draw on Wednesday, Jan. 13. All participating lenders will have access to the PPP shortly after, according to a statement released by the SBA on Friday, Jan. 8.
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said SBA administrator Jovita Carranza. “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.”
The SBA also updated PPP guidance for potential borrowers as a part of the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act.
Major updates include:
PPP borrowers can set their PPP loan’s covered period to be any length between eight 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 and 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 could be eligible for a Second Draw PPP Loan if they:
Previously received a First Draw PPP Loan and will or have used the full amount only for authorized uses;
Have no more than 300 employees;
Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Businesses are encouraged to contact their financial lender or banking institution to see if they qualify.