At the end of last year, Congress passed The Coronavirus Response and Relief Supplemental Appropriations Act which made several changes to the existing COVID-19 federal small business relief programs.
PAYROLL PROTECTION PROGRAM (PPP)
The U.S. Small Business Administration, in consultation with the Treasury Department, announced that the “Second Draw” Paycheck Protection Program (PPP) has reopened for new borrowers and certain existing PPP borrowers.
Key PPP updates 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
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures
- The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations
- The PPP provides greater flexibility for seasonal employees
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses
- Has no more than 300 employees
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Other important changes:
- Loan Forgiveness Reduction: If you also received an EIDL grant, your PPP loan forgiveness will no longer be reduced by the amount of the grant.
- Loan Forgiveness Period: The period for which expenses count toward loan forgiveness will begin on the date of loan origination and end on a date of your choosing that is between 8 and 24 weeks after origination.
- Simplified Application: If your loan was for less than $150,000, there will be a simplified one-page application process for loan forgiveness.