The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, recently announced the re-opening of the Paycheck Protection Program (PPP) for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions were able to make First and Second Draw PPP Loans this week. Today, lenders with $1 billion or less in assets will be able to submit applications for first and second draw loans. Then, the PPP will open to all participating lenders next Tuesday, January 19.
This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward 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.
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, 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.
Contact the Crosslin tax team at (615) 320-5500 with any questions. We are here to help!