SBA Prepares to Release Second Round of PPP Loans
Lenders that specialize in working with minority-owned small businesses will have a head start in tapping PPP funds when the program reopens Jan. 11.
WASHINGTON, D.C. — The U.S. Small Business Administration (SBA) announced on Friday the Paycheck Protection Program (PPP) will re-open the week of Jan. 11 for new borrowers and certain existing PPP borrowers.
The SBA is prioritizing underserved groups such as minority-owned businesses and will only accept applications from community financial institutions during the first two days after its loan portal opens. Community financial institutions will be able to offer first draw PPP loans on Jan. 11, and second draw PPP loans on Jan. 13.
The PPP will open to all participating lenders shortly thereafter. Congress authorized up to $284 billion toward the loans as part of its COVID-19 relief act near the end of 2020. The last day to apply for a PPP loan is March 31, 2021, according to the SBA guidelines.
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” states 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.”
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 PPP has provided 5.2 million loans worth $525 billion to small businesses, supporting more than 51 million jobs, according to the announcement.
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