SBA PPP Re-Opening Guidance

SBA PPP Re-Opening Guidance

SBA PPP Re-Opening Guidance

 

The December 27, 2020 Economic Aid Act (Public Law 116-260) reauthorizes lending under the PPP through March 31, 2021, and among other things, modifies provisions related to making PPP loans and forgiveness of PPP loans, and authorizes second draw PPP loans under new section 7(a)(37) of the Small Business Act for PPP borrowers that previously received a PPP loan. Below are some of the feature of the new program. 

 

Eligibility Criteria:

  • ·         Companies, nonprofits, sole proprietorships and entities that did not get PPP loans during last year’s original $525 billion PPP initiative can receive up to the full $10 million under the new $284 billion Re-Opening if they qualify.
  • ·        60 percent of the money must be spent on payroll within 8 to 24 weeks of getting loans. 
  • ·        The balance can be spent on other eligible expenses like rent, qualified mortgage interest, utilities, those related to operations (HR, accounting, IT), property damage, suppliers, and worker protection (facility modifications and personal protective equipment needed to operate safely under COVID-19.)
  • ·         Entities that did get money last year can apply for second-round loans of up to $2 million.
  • ·         Sole proprietors, independent contractors and some self-employed individuals are eligible, as are churches and other nonprofits.
  • ·      “Business leagues” such as chambers of commerce and visitors’ bureaus can also qualify if they have 300 or fewer workers and receive no more than 15 percent of receipts from lobbying.
  • ·      “Business leagues” such as chambers of commerce and visitors’ bureaus can also qualify if they have 300 or fewer workers and receive no more than 15 percent of receipts from lobbying.

 

Very Small Businesses:

  • ·        The agency is setting aside $15 Billion of first-draw loans and $25 Billion of second-draw ones for borrowers with no more than 10 employees, or for loans of less than $250,000 for borrowers in low- or moderate-income neighborhoods.

 

First time borrowers:

  • ·      Must have been in operation on Feb. 15, 2020 
  • ·      Have 500 or fewer employees. 
  • ·      Accommodations and food-service businesses can have up to 500 employees per location.

 

Second time borrowers: 

  • ·      Must have no more than 300 employees 
  • ·      Must have used up their first PPP aid on eligible expenses 
  • ·      Can demonstrate revenues drop at least 25 percent during any 2020 quarter or 2020 as a whole.

 

Other Info:

  • ·         Most applicants can qualify for aid of up to 2.5 times their average monthly payroll costs, with a cap per employee of $100,000 a year. 
  • ·         Hotels and restaurants applying for second-draw PPP loans can receive up to 3.5 times their average monthly payroll costs.
  • ·         Borrowers who receive $150,000 or less must only submit a one-page certification to lenders that lays out a few details, including the total loan amount, the total spent on payroll and the number of employees the entity managed to avoid laying off by using the money
  • ·         New SBA borrowers between now and the end of September 2021 will get three months of payment relief--up to $9,000 per month--instead of the original six months. This move is due to budgetary constraints
  •  

For official SBA detailed information visit:

 

https://www.sba.gov/sites/default/files/2021-01/PPP%20--%20IFR%20--%20Paycheck%20Protection%20Program%20as%20Amended%20by%20Economic%20Aid%20Act%20%281.6.2021%29-508.pdf