Paycheck Protection Program Reopens

By SLNext
In Uncategorized
Jan 14th, 2021
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Effective January 11, the Small Business Administration’s Paycheck Protection Program (PPP) has reopened. To promote access for smaller lenders and their customers, the program is currently only open for participating Community Financial Institutions to make First Draw loans to businesses. In the coming weeks, the program will open for all participating banks to make both First Draw and Second Draw applications to all eligible businesses. Businesses in need of additional funding to help cover expenses required to keep employees on payroll should reach out to their lender and begin preparing to apply.

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. For most borrowers, the maximum loan amount is 2.5 times their average monthly 2019 or 2020 payroll costs, up to a maximum of $2 million. For borrowers in the Accommodation and Food Services sector (such as restaurants) the maximum loan amount is 3.5 times their average monthly 2019 or 2020 payroll costs, up to a maximum of $2 million.

Who Can Apply

First Draw Loans are available to eligible small businesses (typically those with 500 or fewer employees), nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. Learn more.

First Draw applications are available to those businesses who:

  • Did not apply in the first round of PPP
  • Applied unsuccessfully in the first round
  • Applied successfully in the first round, but returned some or all of the funds

After this initial period, this new round will also offer Second Draw PPP loans for certain qualifying borrowers that have used all of their first loan amounts. Some of the eligibility qualifications include having fewer than 300 employees and being able to demonstrate at least a 25 percent year-over-year drop in sales in at least one quarter.

The legislation sets aside $12 billion specifically for minority-owned businesses.

SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.

Check with your bank to see if they will be participating in this new round of PPP loans.  You can also utilize SBA’s Lender Match program to find participating community and smaller lenders, or check out this list of participating online (‘fintech’) lenders here.

The U.S. Internal Revenue Service will allow businesses that got their Paycheck Protection Program loans forgiven to write off expenses paid for with that money, aligning their policy with legislation passed by Congress in December 2020.

Learn more or get help at:

For additional resources, check our prior posts on San Leandro Next:

CA Offers Two COVID19 Relief Packages (Jan 5, 2021)

Second Federal Stimulus Package Extends PPP, Unemployment, and Other Relief Programs (Dec 22, 2020)

COVID-19 Business Resource Update (Dec 18, 2020)

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