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PPP Loan Program Reopening

Congress revived the PPP loan program as part of the $900 billion COVID-19 relief bill that was signed into law on December 27. The program provided $525 billion in forgivable loans over five months before it stopped accepting applications in August.

The U.S. Department of the Treasury and Small Business Administration unveiled new rules for $284.5 billion worth of federally backed relief loans to small businesses harmed by the coronavirus pandemic:

Additionally, they released guidance for first and second draw loan applications which can be found here and here. The PPP application process will re-open the week of January 11 for “first-draw” loans, but will only be accepting those applications from lenders it has signaled as “community financial institutions.” which include minority deposit institutions, certified development companies, and microloan intermediaries, which means those lenders will be able to process applications and submit them to the SBA first.

On January 13, small businesses applying for a second PPP loan will be able to do so, but once again only with community financial institutions.PPP loan applications will then open up to all participating lenders “shortly thereafter,” the agency said as part of its announcement, though it did not specify an exact date.

If You Are Applying for a First-Time Loan

If your application was denied in the first round or did not receive funds, you have a chance to apply again for an initial PPP loan. Eligible entities include:

  • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.

  • Sole proprietors, independent contractors, and eligible self-employed individuals.

  • An expanded list of non-profits.

This time, the bill is more comprehensive about what paperwork is needed. That means you should have your return materials on file, payments for rent and utilities, as well as payroll information and employment records.

If You Are Seeking a Second Round of PPP Funding

The new law also allows some entities to apply for a second loan. This time, loans are capped at $2 million. To qualify, you must:

  • Prove that you lost 25% or more of revenue in any quarter in 2020 either on a quarterly or annual basis.

  • Have spent all of the first loan.

  • Have less than 300 employees.

To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters of the first round of PPP had when it stopped accepting applications in August. The deadline to apply for new relief loans is March 31.


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