Small businesses hit by the coronavirus pandemic will soon be able to apply for some financial relief, through the second round of the Paycheck Protection Program.
Applications for the loans, which may be forgiven by the U.S. Small Business Administration, are set to begin on Monday, Jan. 11, for small businesses that were not able to get a PPP loan in the first wave, along with some existing borrowers who meet certain conditions.
On Monday, only community lenders were will be able to make “First Draw” loans in order to promote access to capital. The loans will be available to all financial institutions and “Second Draw” applicants on Wednesday, Jan. 13. Small business owners must work with their financial institution to apply for the loans.
“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, in a Friday news release. “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 second round of the PPP program pools $284 billion to be used towards job retention and other business expenses through March 31. The program is part of a $900 billion pandemic relief package signed into law by President Trump in late December.
Updates to the program
-- PPP borrowers can set their loan’s covered period to be any length between eight and 24 weeks to best meet their business needs.
-- The loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs and worker protection expenditures.
-- Eligibility for the program has been expanded to include 501(c)(6)s, housing cooperatives and destination marketing organizations.
-- The program now provides greater flexibility for seasonal employees.
-- Certain existing PPP borrowers can request to modify their First Draw loan amount, while some existing borrowers are now eligible to apply for a Second Draw PPP Loan. An existing borrower is generally eligible for a Second Draw loan if the borrower previously received a First Draw PPP loan and will or has already used the full amount only for authorized uses. The borrower can have no more than 300 employees and must be able to demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.