U.S. Government Reopens Paycheck Protection Program
The U.S. Department of the Treasury and the U.S. Small Business Administration (SBA) announced last week that the Paycheck Protection Program (PPP) will re-open during the week of January 11 for new borrowers and certain existing PPP borrowers. Companies seeking their first loan were able to apply from community lending institutions starting on January 11 while those seeking a second loan can start to apply from those institutions on January 13. These types of institutions represent a very small pool of banks.
The PPP will open to all participating lenders at an undetermined future date and will lend up to $284 billion toward job retention and certain other expenses through March 31, 2021.
The SBA said that, once borrowers are able to apply, they should expect a time lapse between the time their bank submits their loan application and the time the company is given a loan number.
The SBA also reminded potential borrowers about key updates to the program, including that, under a bill signed into law at the end of 2020, the PPP will:
- Allow PPP borrowers to set their PPP loan’s covered period to be any length between eight and 24 weeks to best meet their business needs;
- Provide coverage of additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures; and
- Offer greater flexibility for seasonal employees;
Additionally, companies that previously received a PPP loan can apply for a second if it:
- Will use or has used the full amount of the first loan only for authorized uses;
- Has no more than 300 employees; and
- Can demonstrate at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020.
The SBA also released several forms that will be helpful to businesses interested in the PPP loans, including:
- Application for first-time borrowers;
- Application for second-time borrowers;
- Overview for first-time loan borrowers;
- Overview for second-time borrowers;
Click here for more information from the SBA; here for more information from the National Federation of Independent Business; and here for the U.S. Chamber of Commerce’s Guide to Small Business COVID-19 Emergency Loans, which has answers to frequently asked questions about the changes that have been made to the PPP and to the SBA’s Economic Injury Disaster Loans (EIDL) Program, which also provides grants and loans to small businesses.