A Second Round of Paycheck Protection Program Loans Are On The Way

Small businesses will soon be able to apply for another Paycheck Protection Program to help cover payroll expenses and more.

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If you missed out on the first round of the U.S. Small Business Administration’s forgivable loans through the Paycheck Protection Program, you will soon be able to apply for one as lawmakers passed another COVID-19 relief package.

As part of a larger government funding and stimulus package, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act was signed into law on Dec. 27. It includes another $284.45 billion for the Paycheck Protection Program, a forgivable loan program that Congress first created in the early days of the COVID-19 crisis in March.

Here’s what we know about the second round of PPP funding, per the National Law Review.

Under the relief bill, businesses can receive a loan equal to the lesser of either 2.5 times its average monthly payroll costs either one year before the date of the second round of PPP disbursements, or calendar year 2019. However, the maximum loan amount is capped at $2 million, compared to the $10 million maximum for the first round.

The law also provides for a simplified loan forgiveness process for loans up to $150,000.

Read Next: Help Your Employees by Applying for the Paycheck Protection Program

It gives borrowers the ability to apply for a second round of funding and expands the types of expenses that are eligible for forgiveness.

Borrowers are still required to spend at least 60% of their PPP loan on eligible payroll costs to be eligible for full forgiveness, but this time borrowers can use loans for: additional group insurance expenditures, covered supplier cost expenditures,

To apply, businesses must have no more than 300 employees and suffered a gross revenue reduction of at least 25% between comparable quarters in 2019 and 2020.

Organizations that weren’t eligible for the first round of the loans could now be eligible, including nonprofits, trade organizations, chambers of commerce and others.

Borrowers that returned al or part of their first loan can reapply for the maximum amount under the new law.

The SBA is required to issue implementing regulations by Jan. 6, so these loans aren’t yet available. We expect further information and guidance from the agency in the coming days.

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Zachary Comeau is the senior editor of CE Pro. He comes from a journalism background with more than a decade of experience writing for Commercial Integrator, My TechDecisions, and several daily newspapers and industry trade publications in Massachusetts.

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Comments

  • Nancy Chambers says:

    Hibby & l are a small service oriented corporation with no employees. We’ve been shut down since mid March.
    Can we just apply for a loan?

  • Douglas A. James says:

    I own a small business. I obtained a well needed loan from the SBA to stay in business this past 2020 year. Thank you for your clear explanation of the new SBA loan to small businesss. I need to apply for another loan in order to survive and not close my door. All of the Loan from my prior loan went to pay my staff’s salaries. My personal problem is that I have not taken a paycheck home ( I am an employee of my business which I own 100% of its stock) ever since March of 2020. The prior loan helped significantly pay the salary of my employees and operating expenses, though I am still way behind on my rent. I am working daily to keep my business afloat, but I am not receiving any compensation.
    Nevertheless…thank you again for your very clear explanation of the second round of SBA loans to distress smaII businesses.

  • Roshanda coley says:

    My husband own a barbershop can he apply for the loan.

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