Paycheck Protection Program Reopens

On January 13, 2021, the U.S. Small Business Administration (SBA) reopened the Paycheck Protection Program (PPP) for First and Second Draw Loans.

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The Paycheck Protection Program provides businesses with funds to pay up to eight weeks of payroll costs (including benefits). Funds may also be used to pay mortgage interest, rent, utilities, worker protection costs related to COVID-19, and other qualifying expenses.

The new law allows costs related to business software or cloud computing services that support business operations, purchase orders, business activities to comply with COVID-19 requirements, and group insurance. For child care programs, this means the cost of child care management system software that supports business operations, the food served for children, cleaning supplies, and other expenses would be covered.

This round of PPP will authorize up to $284 billion in total to support job retention and business operations through March 31, 2021. PPP Loans are available for new borrowers and businesses that have received a PPP Loan previously.

First Draw PPP Loans

First Draw PPP Loans are intended for businesses that have not received a PPP Loan previously. Businesses are generally eligible for this loan if the borrower has 500 or fewer employees (including child care programs, nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors). Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.

Second Draw PPP Loans

Second Draw PPP Loans are intended for small businesses that have received a PPP Loan previously. Businesses are generally eligible for this 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 percent reduction in gross receipts between comparable quarters in 2019 and 2020.

The new law allows costs related to business software or cloud computing services that support business operations, purchase orders, business activities to comply with COVID-19 requirements, and group insurance. For example, for child care programs, this means the cost of child care management system software that supports business operations, the food served for children, cleaning supplies, and other expenses.

PPP Loan Forgiveness

Eligible borrowers will qualify for full loan forgiveness if during the eight- to 24-week period following loan disbursement:

  • employee and compensation levels are maintained,

  • the loan proceeds are spent on payroll costs and other eligible expenses, and

  • at least 60 percent of the proceeds are spent on payroll costs.

Application Information

Borrowers can apply for a First or Second Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP. Loans will have the same terms regardless of lender or borrower.

For more information, visit the U.S. Department of the Treasury website or view this document.


NewsHeidi Winkler