DENVER (KDVR) — The Small Business Administration (SBA) is re-opening a program that can help small businesses stay afloat during the COVID-19 pandemic.
On Monday, the SBA announced it is resuming the Paycheck Protection Program (PPP) for new borrowers and certain existing PPP borrowers. The program is an incentive for small businesses to keep their workers on the payroll and use the loan to pay for eligible expenses.
Beginning Monday, only community financial institutions such as Minority Depository Institutions and Microloan Intermediaries will be able to make First Draw PPP Loans. These loans can be used to help fund payroll costs, including benefits, and to pay for other expenses such as rent and utilities.
Second Draw PPP Loans will begin on Jan. 13 and then the PPP will open to all participating lenders shortly after.
The SBA says this round of the PPP authorizes up to $284 billion toward job retention and certain other expenses through March 31. It also allows certain existing PPP borrowers to apply for a Second Draw PPP Loan.
“The PPP was an incredible shot in the arm for small businesses last year, and this second wave of financial support will especially be a boost to businesses in rural and underserved communities,” said Dan Nordberg, SBA’s national director of rural affairs and region VIII administrator, in a statement. “With a targeted opening, SBA is prioritizing and extending relief to impacted business owners who need it the most.
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.