U.S. businesses can apply for new Paycheck Protection Program loans beginning today as the Small Business Administration has opened a new round of funding through community financial institutions.
The loans are available to both new and existing PPP borrowers, according to a press release.
Only community financial institutions will be able to make “first draw” PPP today, Jan. 11, and “second draw” PPP loans on Wednesday, Jan. 13. The PPP will open to all participating lenders shortly thereafter.
The agency announced updated guidance outlining changes to the program on Jan. 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act.
This PPP round authorizes up to $284 billion for job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a “second draw” PPP loan.
“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,” administrator Jovita Carranza said in the release.
The PPP program has provided 5.2 million loans worth $525 billion to small businesses, supporting more than 51 million jobs, said Treasury Secretary Steven T. Mnuchin.
Key PPP updates include:
- Borrowers can set their PPP loan’s covered period to be any length between eight and 24 weeks.
- 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 and other types of organizations.
- Greater flexibility for seasonal employees.
- Certain existing borrowers can request to modify their “first draw” PPP loan amount.
- Certain existing borrowers are now eligible to apply for a “second draw” PPP loan.
A borrower is generally eligible for a “second draw” PPP loan if they meet the following qualifications:
- Previously received a “first draw” PPP loan and will or have used the full amount only for authorized uses.
- Have no more than 300 employees.
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Further guidance under the program is available at the SBA website.
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