SBA Re-Opens PPP Aid to New and Existing Borrowers
Earlier this month, the U.S Small Business Association (SBA) and the Treasury Department decided to relaunch the Paycheck Protection Program to new borrowers and to prioritize loans from lenders in the community. As a result of the latest stimulus package passed by Congress, the program now has $284.5 billion for “first draw” PPP loans as well as “second draw” PPP loans. First-draw loans are for the small businesses that did not take advantage of the program last year, while the second draw is for those who used the PPP loans in 2020. Initially, community financial institutions were able to make first-draw and second-draw loans, but the SBA and Treasury have now opened the program to lenders as well.
In response to last year’s shaky launch, the SBA is making a concerted effort to increasing the availability of loans to small businesses. One complication from the PPP being launched with the CARES Act is that money was exhausted by large companies that already had ties with large banks. This left little money for small businesses until Congress appropriated more money. The PPP will be open through March 31st.
Main updates to the program:
- PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to meet their business needs
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures
- PPP eligibility has expanded to include 501(c)(6)s, housing cooperative, destination marketing organizations, and other organizations
- The PPP now offers more flexibility for seasonal employees
- Qualified existing PPP borrowers can request to modify their first-draw PPP loan amount
- Qualified existing PPP borrowers are eligible to apply for second-draw PPP loans
Borrowers are generally eligible for second draw PPP loan if:
- Previously received at first-draw PPP loan and will or has used the full amount only for authorized uses
- Has no more than 300 employees
- Can demonstrate at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020
Talley’s professionals have spent hundreds of hours reviewing the law, regulations, and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.