The U.S. Small Business Administration and the Treasury Department will reopen the Paycheck Protection Program Jan. 11 to new borrowers and certain existing PPP borrowers, the agency said Friday.
“To promote access to capital for underserved communities, 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,” said Sean Kennedy, the National Restaurant Association’s executive vice president of public affairs.
“The PPP will open to all participating lenders shortly thereafter,” added Kennedy. Available funds in the second round of PPP total $284 billion.
The association has created a manual to help restaurant operators navigate the second round of the program, which was funded as part of the $900 billion pandemic relief measure signed Dec. 27 that included one-time $600 stimulus checks for Americans making up to $75,000 a year.
“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 Jovita Carranza, administrator of the Small Business Administration.
“Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery, said Carranza, who separately outlined PPP guidance for minority-, veteran- and women-owned businesses.
This PPP round authorizes up to $284 billion toward job retention and certain other expenses through March 31. Some existing PPP borrowed can apply for a second draw of PPP loans as well.
The SBA said key updates in the program include:
- PPP borrowers can set their loan’s covered period to be any length between eight and 24 weeks to meet 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;
- Some existing PPP borrowers can request to modify their first-draw loan amount.
The agency added that borrowers are generally eligible for a second draw of PPP loans if:
- They reviously received a first draw PPP loan and have used — or will use — the full amount only for authorized uses;
- They have no more than 300 employees; and
- They can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
The first round of the Paycheck Protection Program included 5.2 million loans valued at $525 billion, said Treasury Secretary Steven Mnuchin in a statement.
“This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19,” Mnuchin said.
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