The Paycheck Protection Program Has Reopened

The Paycheck Protection Program reopens on Jan. 11 with $284.5 billion in new funding, including $137 billion for a second round of PPP loans to hard-hit businesses, thanks to a relief package signed into law on Dec. 27.

Congress made several changes to the small business lending program, including who can receive a loan and what they can spend it on. The U.S. Small Business Administration is also prioritizing applications from underserved communities this time around.

Community financial institutions will have exclusive access to PPP loans until Jan. 13, an effort to ensure women-, minority- and veteran-owned businesses have access to funding.

First-time borrowers were able to apply through CFIs starting on Jan. 11, and applicants looking for second PPP loans on Jan 13. The PPP loan portal will open to small lenders on Jan. 15 and all other approved lenders later on Jan 19.

Here’s everything you need to know about the latest round of PPP funding:

Eligible Businesses

The latest relief package expands the list of who can receive PPP loans to include housing cooperatives, small agricultural co-ops, destination marketing organizations, certain news outlets, and 501(c)(6) organizations, such as chambers of commerce and trade organizations.

There are also a few notable exclusions from the new round of loans. Businesses that started operations on or after Feb. 15, 2020 cannot receive a PPP loan. The same is true for publicly traded companies, think tanks, and organizations that engage in lobbying or political advocacy.

Expenses Covered

Businesses can now use PPP funds to cover a wider variety of expenses.

In addition to payroll costs, rent, and utilities payments—new eligible expenses include operations expenditures (like software), property damage costs that are not covered by insurance, payments to suppliers, and the cost of protective equipment like masks and sneeze guards.

Second-Draw Loans

Businesses that need additional funding can apply for a second PPP loan, provided they meet the necessary requirements, including:

  • Demonstrating at least 25% reduction in annual gross receipts or during any quarter in 2020 relative to the same quarter in 2019
  • Employing 300 or fewer employees
  • Having used or will used the full amount of their first PPP loan

Borrowers can receive up to 2.5 times their average monthly payroll, or 3.5 times for accommodation and food service businesses, for either calendar year 2019, calendar year 2020, or the 12 months prior to the loan.

Seasonal business can use average monthly payroll for any 12-week period between Feb. 15, 2019 and the same date in 2020. Businesses not open for a full 12 months (but in operation on Feb 15, 2020) can use their total payroll costs, divided by the number of months in operation, to determine their loan amount.

Applications for second draw loans open Jan. 13 through community financial institutions and late next week through other approved lenders.

Forgiveness

Under the new relief package, businesses that receive a PPP loan under $150,000 are eligible for a simplified forgiveness application process. These businesses will be able to complete a one-page certification form in order to apply for PPP loan forgiveness.

Save Our Stages Grants

Although not directly part of the PPP program, the relief package designated $15 billion for the SBA to make grants to eligible live venues, performing arts organizations, museums, and similar organizations that demonstrate a 25% reduction in revenues.

Businesses that receive a Save Our Stages grant cannot receive a PPP loan.

Is the Economic Injury Disaster Loan Still Available?

The PPP is the biggest government program for small business loans related to the pandemic, but it’s not the only option.

The economic injury disaster loan (EIDL) is available to businesses in all 50 states and all territories. The immense popularity of the program (and its accompanying “EIDL Emergency Advance” which grants applicants up to $10,000 in economic relief) wiped out its funding early on in the pandemic, but according to the SBA it is now once again accepting applications from eligible U.S. small businesses and agricultural businesses.

You can apply directly for an EIDL through the SBA. For more information on the program, visit our EIDL guide.

What Additional Federal Relief Is Available?

Loan programs are not your only avenues for coronavirus economic relief.

Look into whether you may be able to obtain enough financial relief from the employee retention credit, a fully refundable payroll tax credit that you can take in lieu of the PPP. You can claim that credit immediately by reducing deposits of federal employment taxes, and claiming an advance of remaining credit through IRS Form 7200.

You can also begin exploring other SBA loan products. The SBA has a variety of small business loan options, including the popular SBA 7(a) loan program, the 504/CDC loan program, and the Microloan program.

Although these SBA loans aren’t quite as generous as the PPP—they are not forgivable, for example—nor are they as easy to qualify for, they are typically the best small business financing products available.

You can compare SBA 7(a) loans vs. PPP and EIDL loans with our guide.

Are Online Business Loans an Option?

Small businesses can look to online lenders to find business loans that are easier to qualify for than bank or SBA loans, and have a much faster approval time, as well.

These loans typically have higher interest rates than bank or SBA loans as a result. But if you are looking for quick funding in order to jump on a timely opportunity, or a loan to bridge the gap as you work your way back into the black following the pandemic, online loans could be a good option.

See Your Business Loan Options

What State and Local Resources Are Available?

Financial relief programs are not limited to the federal government. Your state or local government (city or county) may also offer financial resources to help you through this difficult time. Review our list of state-by-state resources to see what might be available.

Eric Goldschein

Eric Goldschein is the partnerships editor at Fundera.

Eric has nearly a decade of experience in digital media, writing and reporting on entrepreneurship, finance, business lending, marketing, and small business trends. 

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