By Will Johnson
EAST TEXAS – Last year, many small businesses were able to stay afloat thanks to the Paycheck Protection Program (PPP). There was only so much funding available in the original PPP, however – and now – many of these same small businesses are right back to where they were before the financial relief was made available.
Fortunately, on Friday, Jan. 8, the U.S. Small Business Administration (SBA) announced that the PPP will re-open the week of next Monday, Jan. 11 for new borrowers and certain existing PPP borrowers.
In a press release from the SBA, it was stated, “To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, Jan. 11, and Second Draw PPP Loans on Wednesday, Jan. 13. The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.”
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 and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.
According to SBA Administrator Jovita Carranza, “The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most. 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 US Treasury Department has been in consultation with the SBA and Treasury Secretary Steve Mnuchin expressed appreciation for the program.
“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. This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”
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 new guidance released includes:
- PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns;
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and
- Interim Final Rule on Second Draw PPP Loans.
Will Johnson may be contacted via e-mail at email@example.com.