Following an initial rollout last week that prioritized community lenders and small businesses in underserved communities, the Small Business Administration has re-opened the Paycheck Protection Program to a wide swath of lenders and applicants.
Both first-time applicants and prior participants from the 2020 version of the PPP can apply for additional funding, after $284 billion was added to the program in the federal relief bill that was signed by outgoing president Donald Trump back in December. Interested applicants may find a qualified SBA 7(a) Lender by using the Lender Match Tool.
With the program back in operation, the SBA has also issued a wealth of guidance to help participants better understand the program and its eligibility requirements. Of note, the SBA has updated their calculation guide for determining how much loan forgiveness a specific business is eligible for, and released an application form specifically for businesses who previously received PPP funds in 2020. The SBA has also updated their loan forgiveness forms to comply with the slightly modified terms of the replenished program.
Under the terms of the relief bill that extended PPP funding, 501(c)(6) non-profits are now eligible to apply for loans, while most applicants are limited to $2 million in funding that will ultimately be converted into a grant by the federal government. For both first- and second-time participants, no less than 60 percent of loan funds must be spent on payroll costs in order to be forgiven; applicants now also have the ability to spread the forgiveness period over a timeframe as long as 24 weeks.
As with the prior versions of the program, PPP applicants must demonstrate that they suffered significant economic hardship, with revenue reductions of at least 25 percent during 2020, when compared to a similar timeframe in 2019. Most eligible small businesses must have 300 or fewer employees to qualify, though larger businesses with an NAICS franchisor code beginning with 72 (generally hospitality businesses) can also qualify, under certain conditions.
The relief bill that added $284 billion to the PPP also extended funding for the SBA’s Economic Injury Disaster Loan program, while also allowing worthy small businesses to seek funding from both programs. Previously, those who received EIDL advance funding could not also receive a forgivable PPP loan.
Please discuss these resources with your financial advisor, so you can determine whether these SBA programs are necessary for your business’ continued financial well-being. Please also review the SBA’s latest rule on administration of the PPP, and the accompanying rule outlining parameters for second-time participants.
WANADA will continue updating our readership as the program continues disbursing funds under President Biden and SBA administrator-designate Isabel Guzman.
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