SBA, US Treasury open new round of PPP loan funding
The U.S. Small Business Administration (SBA), in consultation with the US Department of Treasury, announced that the Paycheck Protection Program (PPP) will re-open this week for new borrowers and certain existing PPP borrowers.
To promote access to capital, only community financial institutions will be able to make the initial PPP loans starting today, and a second draw — or second loans to existing SBA borrowers — on Jan. 13, the federal agencies noted.
The PPP will open to all participating lenders shortly thereafter, they said. Last week, the agency released updated PPP guidance outlining program changes.
This round of the PPP authorizes up to $284 billion toward job retention and certain other expenses through Mar. 31, 2021, and by allowing certain existing PPP borrowers to apply for a second draw PPP Loan.
“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.
During the first round of PPP loans, Puerto Rico’s banking partners approved a combined 2,856 loans for a total of $658.5 million. The loans were granted to some 900 businesses and companies with a combined 25,000 employees. About 80% of the loans went to small and mid-sized businesses, with an average loan of $50,000.
“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said US Treasury Secretary Steven T. Mnuchin.
“This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers,” he said.
Key PPP updates include:
- PPP borrowers can 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; 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.
