The most recently enacted coronavirus relief package, the Consolidated Appropriations Act of 2021, included an additional $284 billion for the Paycheck Protection Program (PPP) available through March 31, 2021. In addition to providing more funding, the legislation also made certain changes to the program that include expanding authorized uses of funds and increasing loan forgiveness flexibility. Of note, the legislation permits borrowers who have already received a PPP loan to apply for a second draw.
The PPP, first established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is a loan initiative aimed at helping small businesses weather the economic fallout from the COIVD-19 pandemic and is important to counties’ ability to support the economic well-being of their residents and communities.
The U.S. Small Business Administration (SBA) and U.S. Treasury Department recently re-opened the PPP with this new $284 billion tranche of funding for new and existing borrowers. So far, only community financial institutions have been able to participate in this round of the PPP, with the program opening for these institutions to make First Draw PPP loans on January 11 and Second Draw PPP loans on January 13. However, the program is expected to open to all participating lenders soon.
In addition to re-opening the program, SBA and Treasury recently released updated guidance to reflect changes to the program included in the legislation. Relevant updates to the guidance include:
- Borrowers can set their PPP loans covered period to be any length between 8 and 24 weeks;
- Loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs and worker protection expenditures;
- Eligibility is expanded to 501(c)(6)s, housing cooperatives, destination marketing organizations and other types of organizations;
- 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.
Borrowers are eligible for a Second Draw PPP loan if they:
- Previously received a First Draw PPP loan and will or have used the full amount for authorized uses only;
- Have no more than 300 employees; and
- Can demonstrate at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020.
Additional resources, new guidance and regulations for the program can be accessed through the links below:
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act
- Interim Final Rule on Second Draw PPP Loans
- Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns
- FAQ on PPP Loan Forgiveness
- U.S. Treasury’s Small Business Assistance Landing Page