Paycheck Protection Program

Overview:

The federal government has made a second round of funds, “Paycheck Protection Program second-draw”, available for small businesses in need of COVID-19 economic hardship relief. To distribute these funds they have partnered with the Small Business Administration (SBA).

At least $25 billion is being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods.

The Paycheck Protection Program provides 2-year, 6-month deferment, 1% fixed-rate forgivable loans to help small businesses cover payroll and other operational expenses.

The SBA is currently accepting Second Draw PPP loan applications from participating lenders such as local banks. They have made available an online tool called “Lender Match” that can help connect you with a lender, a link to Lender Match is posted below for your convenience.

If you did receive a PPP first-draw loan, you may be able to apply for a PPP second-draw loan as well if you meet certain criteria.

Loan details:

In general, first- and second-time PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020, or the year prior to the loan. PPP borrowers with NAICS codes starting with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs on second-draw loans

Eligibility:

  • 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

How to Apply:

***The deadline for applying for PPP second-draw is March 31st 2021***

Go to the SBA website and scroll all the way to the bottom and the application procedure is there:

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans

Helpful links:

Detailed Overview:

https://www.journalofaccountancy.com/news/2021/jan/sba-treasury-issue-ppp2-guidance.html

Lender Match:

https://www.sba.gov/funding-programs/loans/lender-match

PPP1 FAQ:

https://www.sba.gov/document/support-faq-lenders-borrowers

PPP2 Overview:

https://www.nav.com/blog/new-ppp-loans-economic-aid-to-hard-hit-small-businesses-nonprofits-and-venues-act-776579/#:~:text=Again%2C%20new%20businesses%20must%20have,of%20a%20seasonal%20business%20below