The Small Business Administration has announced the federal Paycheck Protection Program has re-opened offering much-needed financial relief to small businesses suffering from the impacts of the coronavirus pandemic. Congress designated $137 billion for “second-draw” loans as part of a larger funding and relief package. The Consolidated Appropriations Act, 2021, signed into law on December 27, includes a total of $284.5 billion for PPP loans.
As a response to widespread criticism that larger banks and companies with existing access to capital were favored during the first round of loans last year, this second round will be available to businesses applying at any SBA approved 7(a) lender including community financial institutions. Community financial institutions are banks and lenders which provide funding for small businesses in underserved communities.
Applications for Smaller businesses that did not receive a PPP loan the first time opened on Monday, January 11. Those that did receive one of the original loans can apply for a second PPP loan beginning on Wednesday, January 13 provided they meet eligibility requirements. For larger applicants, the program will open “shortly thereafter” according to the SBA in a joint announcement with the U.S. Treasury Department. Borrowers can apply for their first or second PPP loan until March 31, 2021, or until funds are depleted.
Who is eligible for a PPP loan in 2021?
First-Draw PPP loans
You may be eligible to apply for your first PPP loan in 2021 if any of the following applies to your business.
- Sole proprietors, independent contractors, and self-employed persons
- Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
Second-Draw PPP loans
You are eligible to apply for your second PPP loan in 2021 if
- You previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses
- You have no more than 300 employees; and
- You can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Below are links with further detail on first and second draw loans released by the SBA