The U.S. Small Business Administration (SBA) will be re-opening the Paycheck Protection Program (PPP) this upcoming week.
This new program is funded by the $284 billion in additional SBA PPP funding that was included in the recent federal COVID relief bill. This round of the PPP allows for first-time borrowers as well as eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan.
The PPP program will begin by opening with community financial institution lenders initially and will open with all additional lenders soon. The program reopens as follows:
- On Monday, January 11 the program will open for new borrowers and certain existing PPP borrowers.
- On Wednesday, January 13, the program will open with borrowers looking to take a second loan.
According to the SBA, the new program includes the following updates:
- PPP borrowers can set their PPP loans 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 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.
Applications must be received by March 31, 2021.
NOTE: The SBA is working quickly to provide lenders with information on the new programs (First Draw Loans and Second Draw Loan) to help ensure they are ready to work with small businesses. Since everything is moving quickly, small businesses should know that lenders are working as fast as they can to be ready to accept applications, but it could take a little time to be fully ready. Detroit Means Business and its partners will continue to share information and resources as soon as possible.
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Click here for more information on PPP loans.
Click here for more information on the PPP First Draw Loans.