The Paycheck Protection Program (PPP) established by the CARES Act, is implemented by the Small Business Administration with support from the Department of the Treasury.
The PPP reopened on January 11th, 2021 and business owners can now apply for funding. A PPP loan may be fully or partially forgivable depending on the use. The program now allows certain eligible borrowers that previously received a PPP loan to apply for a second PPP loan with the same general loan terms as the first.
Use of proceeds
Funding from a 2nd PPP loan can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
PPP forgiveness information
A PPP loan made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same manner as required for the
1st PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60 percent of the proceeds are spent on payroll costs.
A borrower is generally eligible for a PPP loan from this new round if the borrower:
- Previously received a 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.
Maximum loan amount
For most borrowers, the maximum loan amount is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million.
For borrowers in the Accommodation and Food Services sector the maximum loan amount is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.
When to apply
Borrowers can apply for this new round of PPP funding now until March 31, 2021. The program officially opened on January 11, 2021.
The first round depleted quickly and small businesses owners should apply ASAP for the second PPP round. The program is expected to continue through March 31st but may end sooner than that.
Next steps to apply for a PPP loan
Let SmartBiz help you apply for the new round of the Paycheck Protection Program (PPP) that opened on January 11th. Start a PPP application here.
SmartBiz Loans® works with small business owners like you every day to help you apply for the funding you need. Since 2013, we’ve specialized in SBA (Small Business Administration) loans. The new round of this Continuing Paycheck Protection Program Act, to be administered by the SBA, makes continued financial support available to help eligible small businesses keep their employees and stay open safely during the COVID-19 pandemic.
We’ll keep you informed with up-to-date information on the SmartBiz Small Business Blog.
What You Need to Know
The availability of PPP loans remains subject to SBA guidance and other factors, including the amount of funding available to banks and the quantity of eligible applicants considered on a first-come, first-served basis. The information provided above is for educational purposes only. Please consult the SBA’s website for actual rules and the most current guidance.