Small Business Administration (SBA), in collaboration with the United States Treasury Department, has opened the Paycheck Protection Program (PPP) for businesses. In partnership with banks and other small lenders, SBA began accepting applications for Second Draw PPP Loans on January 13, 2021. The process will last until March 31, 2021, and provide access to small lenders and their customers.
Congress has passed the new round of economic stimulus package that goes into effect the week of January 11, 2021. This includes $284 billion in relief financing for small businesses, available through the Paycheck Protection Program (PPP).
To ensure smaller lenders, and their customers, access this loan, SBA is initially only accepting Second Draw PPP Loan applications from community financial institutions (CFIs). These institutions are made up of Minority Depository Institutions (MDIs), Community Development Financial Institutions (CDFIs), Microloan Intermediaries, and Certified Development Companies (CDCs). Businesses that need help, after taking out an initial loan, will be able to apply for a second loan. Still, participating businesses must show proof of substantial revenue decline and meet other requirements detailed below.
The business requirement to qualify for the second-draw PPP loans
If a business or individual received an initial PPP loan, they might qualify for the second round of funding, providing you meet the listed requirements below:
- Employ no more than 300 employees.
- Provide evidence of the use of the first PPP loan.
- Provide evidence of a drop of at least 25% in gross receipts for any quarter of 2020, compared with a similar quarter in 2019.
- Have not closed shop permanently. Businesses that have temporarily shut down or paused operations can receive a second-draw loan.