The U.S. Small Business Administration, in consultation with the U.S. Treasury, announced that banks can start lending money to businesses under round No. 2 of the Paycheck Protection Program. The new PPP round began for lenders with $1 billion or less in assets on Friday, Jan. 15, and to all other participating lenders on Tuesday, Jan. 19.
Businesses must apply for the SBA-backed loans through their community lenders. Money is supposed to be used to mainly cover payroll expenses, as well as costs associated with operations, property damage and supplies.
“SBA has worked expeditiously to ensure our policies and systems are relaunched so that this vital small business aid helps communities hardest hit by the pandemic,” said SBA administrator Jovita Carranza. “I strongly encourage America’s entrepreneurs needing financial assistance to apply for a first or second draw PPP loan.”
Things to know about PPP round No. 2
» The $900 billion stimulus relief bill signed into law by President Trump in December includes $284 billion for the second PPP round.
» First draw PPP loans up to $10 million are for borrowers who did not receive a loan in the first round of the program, which began in March and ended Aug. 8.
» Second draw PPP loans are for qualified small businesses, with 300 employees or fewer, that received a PPP loan in the first round but still need help. These applicants need to show a 25% or more reduction in gross revenue between comparable quarters in 2019 and 2020. The second PPP maximum draw is $2 million.
» Businesses that use at 60% or more of the PPP loan on payroll to help maintain employment levels during the loan’s covered period, can apply to have their loans forgiven. If not, their loans bear 1% interest rate and a five-year maturity.
» The relaunched program is designed to give underserved and minority small businesses a first shot at the loans.
