COVID-19 created unique challenges and hardships for small businesses. To help keep these businesses solvent while mitigating layoffs of employees, the government created a federal relief program under the CARES Act – the Paycheck Protection Program (PPP) – which created loans that would be completely forgiven if used for eligible expenses.

From its outset, the PPP received criticism for distributing money to large corporations in greater magnitude than to smaller businesses less equipped to weather the COVID-19 crisis. In response to these criticisms, the federal government continuously tweaked the program to more effectively allocate relief funds.

A critical goal from Congress was to reach small and low- and moderate-income (LMI) businesses who have not received the needed relief a forgivable PPP loan provides. On February 22, 2021, the Small Business Administration (SBA) announced further changes to the PPP to ensure that the “smallest of small businesses” can obtain federal relief during the continued COVID-19 crisis.

  1. A 14-day wait period. For two weeks, starting Wednesday, Feb. 24, only companies with fewer than 20 employees can apply for PPP relief. The program will be open to all eligible entities March 10 through March 31, 2021.
  2. More financial support for sole proprietors, independent contractors, and self-employed individuals. Congress set aside $15 billion for small and low/moderate-income businesses that are first draw borrowers.
  3. Fewer restrictions on who can access PPP funding. To expand access to the PPP, the Biden administration will eliminate restrictions that prevent PPP support to small business owners with prior non-fraud felony convictions or who are delinquent on their student loans.
  4. Ensured access for non-citizen small business owners who are lawful U.S. residents. Green Card holders or individuals who are in the U.S. on a visa may use an Individual Taxpayer Identification Number (ITIN) to apply for the PPP.

Second Draw PPP Loans

If you are an eligible borrower who previously received a PPP loan, you may apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan.

According to the SBA website, a borrower must meet all of the following requirements to be generally eligible for a Second Draw PPP Loan:

  • Already received a First Draw PPP Loan,
  • Will use or has used the full amount only for authorized uses,
  • Has no more than 300 employees; and,
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

According to the SBA website, Second Draw PPP Loans can be used to help pay for:

  • Payroll costs, including benefits
  • Mortgage interest
  • Rent
  • Utilities
  • Worker protection costs related to COVID-19
  • Uninsured property damage costs caused by looting or vandalism during 2020
  • Certain supplier costs and expenses for operations

Visit SBA.gov for help in connecting with a lender, downloading the application form and frequently asked questions.

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