The U.S. Small Business Administration and the Treasury Department announced Friday that the second round of the Paycheck Protection Program will begin officially on Monday.
But not for everyone.
Monday’s reopening is for small businesses that have not received PPP loans, to help them navigate financial issues related to the coronavirus pandemic. The agency refers to them as first draw loans. SBA said in a news release that “only community financial institutions will be able to make” these loans on Monday.
Dr. Kelly Hunt, director of the Western Pennsylvania district office in Pittsburgh, said these institutions can "submit first-time applications for minority, underserved, veteran and women-owned businesses."
Businesses that had received a PPP loan months ago can apply for a second one on Wednesday – also with community financial institutions.
The program, according to SBA, “will open to “all participating lenders shortly thereafter.”
Hunt, a Washington County native, said in a statement: "I believe the staggered start will enhance the programs’ effectiveness and accessibility, particularly to Western Pennsylvania’s smallest, underserved businesses. This new round of funding expands eligibility, offers more allowable expenses and provides a simple forgiveness process."
PPP is designed to provide relief for small businesses across the United States, helping them to keep employees, handle certain other expenses and continue operating. Up to $284 billion has been authorized to be used through March 31. The first round of PPP began on April 3.
SBA administrator Jovita Carranza said in a prepared statement: “The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most. Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”
Updates to the program include:
- Borrowers can set their loan coverage to anywhere between eight and 24 weeks;
- Loans will cover additional expenses, including operating expenses, property damage costs, supplier costs and worker protection expenditures;
- Eligibility is expanded to include 501©(6)s, housing cooperatives, destination marketing organizations and other types of organizations;
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount;
A borrower is generally eligible for a second draw loan if he or she:
- Previously got a first-draw loan and will use or has used the full amount only for authorized uses;
- Has a ceiling of 300 employees;
- Can prove at least a 25% drop in gross receipts between comparable quarters in 2019 and 2020.