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Paycheck Protection Program Reopens for Small Businesses

01.08.21

BPM updated this article on January 14, 2020 to reflect the latest information. 

On January 8, 2021, the U.S. Small Business Administration (SBA) and the Treasury Department announced the Paycheck Protection Program (PPP) would be reopened the week of January 11, 2021.  

In an effort to promote access to capital, priority access will be provided only to community financial institutions. These institutions may make first draw PPP loans on Monday, January 11 and second draw PPP loans on Wednesday, January 13.  The SBA has since confirmed it will reopen the PPP loan portal to eligible lenders with $1 billion or less in assets for first and second draw applications on Friday, January 15 and to all participating lenders on Tuesday, January 19. 

In addition, on January 6, 2021, the SBA released updated guidance providing further context on changes to PPP – including updates to first draw (existing) loans and rules for second draw loans – as required by the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act. Below are a few highlights from that guidance for second draw loans:

  • The applicant must submit to the lender SBA Form 2483-SD. The SBA has not yet released this form, although we expect it imminently, given loans may be processed beginning next week. 
  • For loans with a principal amount greater than $150,000, the SBA will now require sufficient documentation to establish if the applicant experienced the required reduction in revenue (in general a reduction in gross receipts of 25% or greater in one quarter in 2020 relative to the same quarter in 2019).
    • This documentation may include relevant tax forms, including annual tax forms, or, if tax forms are unavailable, the quarterly income statements or bank statements of the business.
  • The SBA will not require additional documentation to substantiate payroll costs for a second draw loan, if the business (1) used calendar year 2019 figures to determine its first draw PPP loan amount, (2) will also use calendar year 2019 figures to determine its second draw PPP loan amount, and (3) will use the same lender that made the first draw PPP loan. 

As with the original PPP, there are a number of exceptions – including those for businesses with NAICS Code 72 (Accommodation and Food Services) and seasonal businesses – that you will want to review for applicability to your business. If you need help or have questions, contact BPM’s Economic Recovery & Emergence Task Force members Terry Hill or Brett Hazlett.