The new round of the Paycheck Protection Program (PPP) loans opens this week. Below is an overview of what we know now, we will share updates as we receive them.

At the high level, there is funding for three categories of PPP loans in this legislation:

1. First time PPP loans for businesses who qualified under the CARES Act but did not get a loan (“first draw” PPP loans);
2. Second draw PPP loans for businesses that obtained a PPP loan but need additional funding; and
3. Additional funding for businesses that returned their first PPP loan or did not get the full amount for which they qualified.
   

The PPP loan can be fully forgiven and is non-taxable. For all types of PPP loans, no collateral or personal guarantee is required. For these new loans, any amount not forgiven becomes a loan at 1% for five years.

Eligibility for a "Second Draw" This program is for small businesses, non-profits, sole proprietors, and independent contractors who have exhausted their initial PPP loan. The program will make new loans through March 31, 2021 or until the new funding is exhausted. Eligibility includes:

• 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 in the first, second, or third quarter of 2020 relative to the same 2019 quarter.

"Second Draw" Key PPP Updates

• PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
• PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
• The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
• The PPP provides greater flexibility for seasonal employees;
• Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
• Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.

How to Apply:

• If you have an account at a community bank, ask if they will be taking applications for PPP loans during this round. If so, you should be able to start the application process as soon as Wednesday, January 13. 
• If you do not have an account at a community lender and want to take apply for PPP Entrepreneur Fund can help! Please complete the COVID-19 Support Inquiry Form and our staff will connect with you on next steps. 

Planning to borrow through the PPP forgivable loan program for the FIRST TIME?

The SBA is giving priority to first time borrowers who apply through community lending institutions, rather than the big banks. PPP applications through the large financial institutions will begin at a later date.

• Prepare your 2019 or 2020 payroll summary reports (if you have employees). If you do not have employees, use your 2019 Tax Return 1040 Schedule C.
• If you have an account at a community bank, ask if they will be taking applications for PPP loans during this round. If so, you should be able to start the application process on January 11. 
• If you do not have an account at a community lender and want to take apply for PPP the Entrepreneur Fund can help! Please complete the COVID-19 Support Inquiry Form and our staff will connect with you on next steps.