The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced on January 8, 2021 that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
Paycheck Protection Program:
This is Round 3 for this forgivable loan program and the new deadline for submitting applications is March 31, 2021. As previously, we expect you will be required to submit your applications through an authorized SBA lender, so make sure you are communicating with your lender now.
As with the previous two (2) rounds where the PPP funds could be used to cover payroll, rent, and covered mortgage interest, the use of PPP funds is now expanded to include:
- Certain operations expenses including business software, business-related cloud computing services, product or service delivery, payroll processing, payment, and tracking costs, HR and billing functions, tracking of supplies, inventory, records, and expenses
- Covered property damage costs including costs related to damage or vandalism caused by looting or public disturbances in 2020 that were not covered by insurance or other compensation
- Listed supplier costs including payments to a supplier of goods that are essential to operations and made pursuant to a contract or order in effect at any time before the covered period or, with respect to perishable goods, in effect at any time during the covered period
- Covered worker protection expenses including operating or capital expenditures required to comply with requirements or guidance issued by the CDC, HHS, OSHA, or any state or local government during the period beginning March 1, 2020, and ending on the date when the national emergency expires
If you received PPP funding in Round 1 or Round 2, you may be eligible for Round 3 funding under certain conditions. If you expect to apply for the PPP for the first time, then the original eligibility criteria is expected to apply. There are other considerations that you should be aware of and will be determined by the SBA.
Economic Injury Disaster Loan Program:
This is the loan program that does not have a forgivable portion. However, there are features that may be better suited to you in your particular circumstance than the PPP. The Economic Injury Disaster Loan (EIDL) is a low-interest loan of 3.75% with a 30-year repayment term. It does not have the limitations on use for payroll as with the PPP, which may be a consideration for companies that do not employ large numbers of people. The covered period is through December 31, 2021 or until the funds are exhausted.