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Small Business Administration is reopening the Paycheck Protection Program (PPP)

"The Small Business Administration is reopening the Paycheck Protection Program (PPP) next week for both new and existing borrowers. In this new round of financing, there will be $284 billion available through March 31, 2021.

This additional PPP financing is made possible through of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, which is part of the $900 billion Consolidated Appropriations Act of 2021 that was signed into law by President Donald Trump on Dec. 27, 2020.

Of the total PPP loan amount, $105 billion has been set aside for specific borrowers and lenders. The largest set-aside is $35 billion for new first-draw PPP borrowers. There will also be set-asides of $15 and $25 billion for first and second draw PPP loans for employers with 10 or fewer employers or from loans less than $250,000 for borrowers in “low-or moderate-income neighborhoods.” Community financial lenders have received a set-aside for $15 billion for first and second draw PPP loans, and Insured Depository Institutions, credit unions and farm credit system institutions with consolidated assets of less than $10 billion will also receive a $15 billion set-aside.

“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” SBA administrator Jovita Carranza said in a statement. “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.”

The SBA is aiming to increase the impact of the new PPP loan period by providing guidance to increase minority, underserved, veteran and women-owned businesses’ access to capital.

Once the PPP lending window opens on Monday, Jan. 11, the SBA will limit first draw PPP loan applications to community financial institutions for at least the first two days. This is designed to promote increased access to capital. In addition, the SBA will be dedicating time for processing and assisting the smallest PPP lenders with loans.

Under the new PPP guidelines, businesses will be able to set their loan coverage period between eight and 24 weeks and will be able to use the loans to cover more expenses, including operation expenditures, property damage costs, supplier costs and worker protection costs.

Select employers that have previously received a PPP loan will be able receive a “Second Draw” PPP loan. This second loan can be up to $2 million.

To qualify for a Second Draw PPP loan, employers must have no more than 300 employees and can demonstrate that their company has had at least a 25 percent reduction in gross receipts from the comparable quarterly periods in 2019 and 2020.

According to figures from the SBA, in the initial round of PPP funding, 87 percent of PPP loans were for $150,000 or less, and “more than 70 percent” of the loans went to businesses with fewer than 10 employees. The average loan size was $101,000.

Rural small businesses received approximately 15 percent of the total PPP loan amount during the first round, and small businesses in “Historically Underutilizes Business Zones” (HUBZones) received roughly $130 billion in loans, or more than 25 percent of the PPP total."

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