SBA and Treasury Announce PPP Re-Opening; Issue New Guidance
WASHINGTON –
The U.S. Small Business Administration (SBA), in
consultation with the Treasury Department, announced today that the Paycheck
Protection Program (PPP) will re-open the week of January 11 for new borrowers
and certain existing PPP borrowers. To promote access to capital, initially
only community financial institutions will be able to make First Draw PPP Loans
on Monday, January 11, and Second Draw PPP Loans on Wednesday, January
13. The PPP will open to all participating lenders shortly thereafter.
Updated PPP guidance outlining Program changes to enhance its effectiveness and
accessibility was released on January 6 in accordance with the Economic
Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
This round of the PPP continues to prioritize millions of Americans employed by
small businesses by authorizing up to $284 billion toward job retention and
certain other expenses through March 31, 2021, and by allowing certain existing
PPP borrowers to apply for a Second Draw PPP Loan.
“The historically successful Paycheck Protection Program served as an economic
lifeline to millions of small businesses and their employees when they needed
it most,” said Administrator Jovita Carranza. “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 Paycheck Protection Program has successfully provided 5.2 million loans
worth $525 billion to America’s small businesses, supporting more than 51
million jobs,” said Treasury Secretary Steven T. Mnuchin. “This updated
guidance enhances the PPP’s targeted relief to small businesses most impacted
by COVID-19. We are committed to implementing this round of PPP quickly
to continue supporting American small businesses and their workers.
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, direct 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.
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