Small Businesses Can Apply for PPP Loans Starting Jan. 11

Congress included up to $284 billion toward the small business loan program as part of the Covid-19 relief package that went into effect near the end of 2020. The Paycheck Protection Program will reopen on Jan. 11, offering forgivable loans to small businesses and allowing some companies to borrow a second time.

That measure also includes additional aid for small businesses in the form of tax deductibility for expenses covered by PPP, as well as tax credits for firms that kept their employees on payroll. It also simplified forgiveness for loans under $150,000.

However, this time, the Small Business Administration and Treasury Department have staggered the reopening. Applications will initially be limited to smaller, community-based lenders, a response to widespread criticism that larger banks and companies with existing access to capital were favored during the first round of loans early in the pandemic. Additionally, the SBA released new guidance on accessing capital specifically for underrepresented business owners, including women, people of color, and veterans.

Smaller businesses that did not receive a PPP loan the first time around are the first in line. They can begin to apply on Monday, January 11. Those that did receive one of the original loans can apply for a second PPP loan beginning on Wednesday, January 13, provided they meet eligibility requirements again. For larger businesses, the program will open “shortly thereafter,” the SBA said in its announcement.

Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6. Key PPP updates include:

• 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;
• The Program’s 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.

A borrower is generally eligible for a Second Draw PPP Loan 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.