Applications for PPP loans are open as of January 11, 2021.
The SBA portal will first be open to lenders who disburse PPP loans to underserved borrowers (like CDFIs, MDIs, and community lenders).
The portal will be open to community lenders for first-draw loans from January 11 – January 13 and second-draw loans on January 13.
The portal will open to all other lenders shortly after.
Other lenders may start to accept applications on January 11, but those applications won’t be processed until the SBA portal opens to all lenders.
If you are ready to get started, fill out the form below. Otherwise, keep reading for more info.
After months of stalling, weeks of fierce negotiations, and too many false starts to count, a new bill was passed to help businesses and individuals across the country find relief from the economic devastation created by the COVID-19 pandemic. The Consolidated Appropriations Act, 2021 includes funding earmarked for small business loans, including a new round of the Paycheck Protection Program (PPP). It’s a sequel, y’all.
The PPP was established last spring under the CARES Act. While many small businesses were able to take advantage of the program to access capital, flaws in the program prevented many businesses that truly needed funding from getting it. Updates to the PPP under the new bill aim to address these issues for first-time loan recipients and enable a second draw for those who have already received a PPP loan.
Here’s everything you need to know about PPP Round 2.
The PPP is a loan program managed by the Small Business Administration (SBA) and enables certain lenders (including banks, FinTech companies, and community lenders like CDFIs and MDIs) to distribute PPP loans on behalf of the SBA to small businesses.
Want a quick look at everything that’s changed under the new bill? Here’s PPP under the Consolidated Appropriations Act, 2021 at-a-glance:
Only certain businesses are eligible to receive a PPP loan, and these specifications are different for first-time loan recipients and second-draw recipients.
To be eligible for a first-draw PPP loan:
To be eligible for a second-draw PPP loan:
Businesses eligible for first- and second-draw PPP loans include:
The following businesses remain ineligible for PPP loans:
To ensure PPP loans are distributed to the businesses that really need capital, amounts of PPP funding has been set aside for specific institutions (these may be adjusted in the future):
All PPP loans have a fixed interest rate of 1%. The new bill has clarified that the interest rate is non-compounding and non-adjustable for first- and second-draw loans.
Under PPP, lenders may not:
Businesses that receive PPP loans may also receive loans from other lenders or programs and may be able to obtain credit from other institutions.
The maturity of a PPP loan is five years.
The deferral period lasts until the loan forgiveness amount is determined. This means that until you know how much of your loan will be forgiven, you don’t need to start making payments. Borrowers who fail to apply for loan forgiveness must start making loan payments within ten months of the last day of the covered period.
There are limits to what borrowers can receive; these vary depending on the specifics of the business and whether a borrower has already received a PPP loan.
The maximum amount a business that has not yet received a PPP loan can borrow is the lesser of:
There may be exceptions to these limits for restaurants and other hospitality businesses.
Any business that is applying for a second draw will be subject to more stringent limitations. The maximum second PPP loan amount is the lesser of:
A major benefit of the PPP is streamlined and simplified loan forgiveness. The new legislation expands expenses that are eligible for forgiveness and makes applying for forgiveness even easier.
In order for the loan to be eligible for forgiveness, the funds must be used within the covered period. If you have already received a PPP loan from the first round, nothing has changed. Your covered period remains the same.
If you are applying for a first- or second-draw PPP loan, you may choose a covered period that is anywhere from eight to 24 weeks after receiving the loan. This gives you the flexibility to choose a covered period that works best for you.
In order to get full or partial PPP loan forgiveness, it is critical that you spend the loan money on covered expenses. The new bill has expanded covered expenses for PPP.
Below is the full list of covered expenses for PPP. Certain items are covered for all PPP recipients, round 1 and round 2, but certain items are only covered for first-draw borrowers of PPP round 2, second-draw borrowers of PPP round 2, and borrowers of PPP round 1 whose loans have not yet been forgiven. We break these down in the tables below.
|First-draw borrowers of PPP Round 2||Second-draw borrowers of PPP Round 2||Borrowers of PPP Round 1; loans have not been forgiven||Borrowers of PPP Round 1; loans have been forgiven|
|Employee payroll costs*||x||x||x||x|
|Group health insurance payments||x||x||x||x|
|Dental and vision plans||x||x||x||x|
|Owner compensation costs**||x||x||x||x|
* These include salaries, wages, tips and commission, and are capped at a max of $15,385 within an eight-week covered period or capped at a max of $46,154 within a 24-week covered period for each employee.
**These are capped at eight weeks worth of the net profit earned in 2019—but not more than $15,385; or two and a half months worth of net profit earned in 2019—but not more than $20,833, depending on the covered period.
|First-draw borrowers of PPP Round 2||Second-draw borrowers of PPP Round 2||Borrowers of PPP Round 1 whose loans have not yet been forgiven||Borrowers of PPP Round 1 whose loans have been forgiven|
|Paid time off and leave for employees*||x||x||x||x|
|Pension and retirement plans||x||x||x||x|
|Federal income and FICA taxes||x||x||x||x|
|State unemployment insurance||x||x||x||x|
|Interest on mortgage payments||x||x||x||x|
|Business software or cloud services that facilitate business operations**||x||x||x|
|Costs related to property damage, vandalism or looting due to unrest that occurred in 2020||x||x||x|
|Supplier costs that are essential to the operations of the business||x||x||x|
|PPE that help businesses comply with federal and state COVID-19 safety guidelines (like face masks)||x||x||x|
|Measures that help businesses comply with federal and state COVID-19 safety guidelines (like plastic separators)||x||x||x|
*Keep in mind that if you use FFCRA tax credits to cover these, then they will not be considered eligible expenses.
**These include software or cloud services that facilitate product or service delivery, processing payments, tracking of payroll expenses, human resources, sales and billing functions, accounting, tracking supplies and/or inventory, tracking records and/or expenses.
In order to qualify for forgiveness, you must keep records and documentation (including purchase orders and invoices) for these expenses.
Keep in mind that these expenses are still not covered:
A number of different PPP forgiveness applications have been released, and the new bill has provided yet another. We’ll break them down for you here:
|Forgiveness Application||Who is eligible to use this application?||Details|
|Paycheck Protection Program Loan Forgiveness Application||Anyone who has applied for a PPP||This was the first PPP forgiveness application released; it was revised on June 16, 2020 and remains in use.|
|PPP Loan Forgiveness Application Form 3508EZ (also known as the EZ Loan Forgiveness Application)||
|This is a simpler, more streamlined PPP loan forgiveness application.|
|PPP Loan Forgiveness Application Form 3508S (also known as the Simplified Loan Forgiveness Application)||Any PPP borrower who has borrowed less than $50,000||This simpler, streamlined forgiveness application was released in October of 2020 under an interim final rule that indicated borrowers of less than $50,000 would be exempt from forgiveness reductions based on reductions in FTE employees and reductions in employee salaries or wages.|
|Simple Loan Forgiveness Application||Any PPP borrower who has borrowed less than $150,000||This is a new forgiveness application under the new bill and has not yet been released; it will be a simple-one pager and will make obtaining forgiveness easier for borrowers.
The one-pager will require the borrower to sign and certify a description of:
Remember to retain relevant records related to employment and expenses. These records may be reviewed and audit these loans to ensure against fraud.
The new bill has clarified the taxability of PPP loans and the deductibility of expenses paid for with PPP loan proceeds. These are effective as of March 27, 2020 (the date CARES was enacted); and remain effective under the new bill for both first- and second-draw loans:
This depends on where you apply; different lenders have different application requirements, but eligibility, loan terms, and forgiveness won’t change from lender to lender.
Contact banks and lenders in your area to find out if they are supporting the PPP program. Keep in mind that lenders who are offering first-draw loans may be ready to distribute loans before lenders offering second-draw loans (because wading through second-draw legislation and shifting internal practices may take some time for these institutions).
Here is a list of popular lenders; this list indicates whether these lenders are participating in this round of PPP. We will continue to update this list as more information on lenders becomes available.
Yes, as long as you are eligible and can adhere to the terms of the loan. With the creation of the new bill, Congress has set aside allocations for community lenders and institutions that can help smaller businesses, businesses owned by POC, and those who operate in lower-income areas access capital.
A portion of funding is being directed to Community Development Financial Institutions (CDFIs) and Minority Depository Institution (MDIs). These are community lenders who have committed to expanding economic opportunity for underserved people. Not only are portions of the PPP allocated for these lenders, but also outside of PPP funds; $12 billion is being routed to CDFIs and MDIs. This means that even if the community lenders in your area aren’t supporting PPP, they may be offering other loans with federal funds under the Consolidated Appropriations Act, 2021.
Yes. Within 17 days of the enactment of this bill, the SBA is required to release guidance to lenders on allowing borrowers who have returned loans to access PPP capital.
No. This is very important; both the CARES Act and the new bill offer have allocated money to a number of different loan and grant programs outside of PPP. If you do not qualify for PPP, you have other options to access capital.
The Consolidated Appropriations Act, 2021 has injected capital into the following programs:
Use the COVID small business relief finder to find loans and grants.
Please note: This is not to be taken as legal advice. Please consult with an attorney for specific legal questions regarding any of the provisions above.