As part of an end-of-year pandemic relief package, Congress passed several changes to the Paycheck Protection Program (PPP) and created a “Second Draw” PPP for small businesses who have exhausted their initial loan. Other changes impact eligibility for initial PPP loans, the loan forgiveness process, and the tax treatment of PPP loans.
PPP has opened to all participating lenders as of Tuesday, January 19.
What should a business know about the updates to PPP?
This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan. Updates to the program include:
- 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;
- Borrowers must have been in business by February 15, 2020;
- PPP loans will cover additional expenses, such as:
- Operations – software, cloud computing services, and other related expenses;
- Supplier Costs – goods essential to operation of business. Nonperishable items received before the loan received are only eligible, perishable items may have been purchased anytime;
- Worker Protections – expenses that go toward keeping employees safer during COVID-19, including personal protective equipment (PPE), drive-thru windows, sneeze guards and outside dining enclosures;
- Property Damage – costs related to riots or public disturbances that occurred in 2020 that were not covered by insurance;
- 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
What should a business do at this point?
Begin the conversation with your lender or a financial institution (bank, credit union, Community Development Financial Institution (CDFI), etc.) you have a relationship with to share your interest in applying for your first or second PPP loan. Businesses can only apply for PPP directly through a lender/bank. Ensuring whomever you have a financial relationship with knows of your intent can help the relay of information on how to proceed.
Looking for a lender? Click this link for a list of YCEA member lenders. Additionally, YCEA has created a revolving list of lenders we know are accepting PPP applications for current and new clients. The list, as it currently stands, can be found here.
Lenders interested in adding your name to the list may email Sully Pinos at firstname.lastname@example.org.
Businesses interested in preparing their application, can download the following PPP borrower application forms to see the information that will be requested from you when you apply with a lender:
- Paycheck Protection Program First Draw Borrower Application Form (revised 01/08/2021)
- Paycheck Protection Program Second Draw Borrower Application Form (revised 01/08/2021)
Changes in Economic Injury Disaster Loans (EIDL Program)
The new law reopens the popular $10,000 EIDL Advance Grant program. Priority for the full amount of the EIDL grant will be given to small businesses with less than 300 employees, located in low-income neighborhoods, who have experienced a 30% reduction in gross receipts during any 8-week period between March 2, and December 31, 2020 compared to a comparable 8-week period before March 2. If you meet this description and/or previously received an EIDL grant that was less than $10,000 you can reapply to receive the difference. Applicants will only be able to apply once for the EIDL loan.
The program hasn’t reopened yet, the Small Business Administration is still working on relaunching the program.
Interested in a Webinar or Further Assistance?
The PA Small Business Development Center will launch a weekly SBA Emergency Loan Webinar series. The free series is hosted every Thursday from January 14 – February 25. The series will cover the process of applying, FAQ’s, eligibility, and other helpful guides. To register for the event please view the informational flyer and click on a date, click here.
- Need assistance with your application? Email email@example.com or complete a consulting form with the Pennsylvania Small Business Development Center (PA SBDC)