The Paycheck Protection Program has been extended through May 31, 2021, providing small businesses with extra time to apply.
The Small Business Administration (SBA) is now accepting Second Draw PPP Loan Applications from January 13, 2021 through March 31, 2021. Recipients of the first round of PPP loans that have used the full amount for authorized uses are eligible to apply. The same general terms apply for this round of lending. The loan amount is based on 2.5 times the average monthly payroll in either 2019 or 2020 and the borrower must be able to show that they had a 25% reduction in gross receipts in comparable quarters of 2019 and 2020.
As in the first round of these loans, the bank you have your current banking relationship with is your best first option to see if they are participating. The following link from the Small Business Administration will assist you in finding a lender if your bank is not participating: PPP Lender Match (SBA).
There is a Loan Forgiveness component to the Second Draw PPP Loans that is as follows:
Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8 to 24 week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60 percent of the proceeds are spent on payroll costs