The Small Business Administration announced the Paycheck Protection Program (PPP) would re-open beginning Jan. 11. Second draw loans for companies who already received a PPP loan are included in this round.
SBA will have $418 billion to disperse in this funding round, including $134 billion leftover from the second round and an additional $284 billion approved by Congress in December.
Community financial institutions will open PPP lending Jan. 11 to make first draw loans, with second draw loans open Jan. 13. SBA said remaining lenders would be able to submit PPP applications “shortly thereafter.”
Businesses which received a PPP loan will have similar terms and conditions for their second draw, according to interim final rules SBA issued Jan. 7.
Among the changes in eligibility is companies must have fewer than 300 employees, or fewer than 500 employees if they operate more than one location, to access a second draw.
In addition, the company must be able to demonstrate a revenue reduction of 25 percent or more for any quarter of 2020 relative to the same quarter of 2019
“A borrower must calculate this revenue reduction by comparing the borrower’s quarterly gross receipts for one quarter in 2020 with the borrower’s gross receipts for the corresponding quarter of 2019,” the interim final rule stated.
In a second draw, borrowers will be able to set their loan covered period to be any length between eight and 24 weeks, SBA stated. PPP second draw loans will cover the same expenses as the first draw with some new categories: operations expenditures, property damage costs, supplier costs and worker protection expenditures.
If the company used calendar year 2019 figures to determine its first draw loan amount, uses calendar year 2019 figures to determine its second draw loan amount and uses the same lender, then SBA stated the company would not need to provide additional documentation to apply for a second draw.
