The New Year Brings Great Tidings of Additional Support for Small Businesses!
However, the Love was not Unconditional…

By: Edward R. Milhorn, Compliance Consulting Director

On January 8, 2021, the U.S. Small Business Administration (SBA) announced that the Paycheck Protection Program (PPP) would officially reopen on Monday, January 11th; however, this reopening was not without its conditions. In an effort to ensure that underserved businesses receive must-needed funds, PPP loans were only initially available to community development financial institutions, minority depository institutions, certified development corporations and microloan intermediaries making First-Draw PPP loans. Those in need of a Second-Draw PPP loan were eligible to apply beginning on Wednesday, January 13, 2021, and the SBA intends to extend the PPP reopening to all participating lenders shortly thereafter, perhaps as early as the week of January 18.

Authorized to distribute up to $284 billion toward job retention and certain other expenses through March 31, 2021, the reopened PPP also comes with quite a few updates. Specifically, these updates included:

  • Borrowers are permitted to 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
  • Certain existing PPP borrowers are now eligible to apply 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
    • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

In addition to the staggered reopening and updates to the PPP, the SBA also released new forms for the next round of the PPP, including revised first and second draw borrower applications and lender guaranty applications. The agency also issued additional guidance to banks making PPP loans under the new program rules. For those interested in learning more, the updated forms and guidance documents can be found by following the links listed below.

Revised First Draw Forms:

Revised Second Draw Forms:

Updated Guidance & Resources:

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