Feds issue new PPP guidance

The U.S. Small Business Administration and Treasury Department this week issued new guidance on the Paycheck Protection Program. 

The program re-opened this week for new borrowers and certain existing PPP borrowers. To promote access to capital, initially, only community financial institutions were able to make First Draw PPP Loans on Jan. 11, and Second Draw PPP Loans on Jan. 13. 

The PPP was scheduled to open to all participating lenders shortly thereafter. Updated PPP guidance outlining program changes was released Jan. 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. 

Some key updates: 

  • 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. 

The new guidance released includes: 

  • PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns.
  • Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and Interim Final Rule on Second Draw PPP Loans.  

For more information on SBA’s assistance to small businesses, visit sba.gov/ppp or treasury.gov/cares