For advisors and small employers that were not able to take advantage during the first round, the Small Business Administration has announced that it will reopen the program the week of January 11.
To promote access to capital, the SBA notes that initially only community financial institutions will be able to make first draw PPP loans on Monday, Jan. 11, and second draw PPP loans on Wednesday, Jan. 13. The PPP will open to all participating lenders shortly thereafter, according to the announcement.
This round of the PPP continues to prioritize the needs of those employed by small businesses by authorizing up to $284 billion toward job retention (including retirement plan contributions) and certain other expenses through March 31, 2021. It also allows certain existing PPP borrowers to apply for a second draw PPP loan.
Updated PPP guidance outlining program changes was released Jan. 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, enacted Dec. 27, 2020, as part of the Consolidated Appropriations Act, 2021.
According to the SBA, key PPP updates include that:
- 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;
- 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.
As to second draw PPP loans, a borrower is generally eligible 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.
The new guidance released includes:
- Guidance on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns;
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and
- Interim Final Rule on Second Draw PPP Loans.
Following enactment of the Consolidated Appropriations Act, the Treasury Department and IRS issued guidance confirming that deductions are allowed for the payments of eligible expenses when such payments would result—or be expected to result—in the forgiveness of a covered loan under the PPP.
