Situation Report | January 18, 2021
Applications are again open for Paycheck Protection Program (PPP) loans through the Small Business Administration (SBA).
PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on payroll. Loans may qualify for full loan forgiveness if certain conditions are met.
This new opportunity was included in December’s federal relief package, which appropriated $284 billion to reopen the PPP program for new and existing qualifying borrowers.
First- and second-time eligible borrowers may apply for what’s called “First Draw” or “Second Draw” PPP loans, as applicable, until March 31, 2021.
Applications for Second Draw loans opened on January 13. The application form is available on the SBA website. These loans are open to entities with 300 or fewer employees who experienced a revenue reduction from 2019 to 2020 and received a “First Draw” loan that they have used, or will use, in full. The maximum allowable loan amount is $2 million. To learn more about eligibility criteria, see this detailed article from BKD CPAs & Advisors.
Like the first round of PPP, borrowers must spend at least 60 percent of the loans on payroll (that percentage was eased from a prior threshold of 75 percent under the “Payment Protection Program Flexibility Act”).
To be eligible for a “First Draw” loan, an entity, together with its affiliates, must have 500 or fewer employees. More information about “First Draw” loans is available here. An application is here.