The SBA and the US Treasury Department announced yesterday that they will re-open the Paycheck Protection Program loan portal to certain smaller PPP-Eligible lenders for First or Second round loan applications on Friday January 15, 2021. The loan portal will open to all participating PPP lenders on Tuesday January 19, 2021.
Following are the highlights of the changes to the program as a result of Congress’ funding of an additional $285 billion for the program.
- First-time borrowers get a second chance. Anyone eligible under the original guidelines that missed the application deadline can apply under the same conditions as were in effect earlier last year.
- No more than 500 employees
- Business was in operation on February 15, 2020
- Loan limited to 2.5 times average monthly 2019 or 2020 payroll costs, $10 million maximum
- Owner compensation limited to lesser of 2.5 months of 2019 net profit or $20,833
- Second-time borrowers can apply for another PPP loan if they spent or expect to spend all of the first round of PPP funding before receiving the second loan, whether or not they have started the loan forgiveness process. Following are the conditions for businesses applying for a second round of PPP funding.
- No more than 300 employees
- Loan limited to 2.5 times average monthly payroll costs, $2 million maximum
- Hospitality, accommodations and Food Services companies with a NAICS code beginning with 72 can borrow up to 3.5 times average monthly payroll costs, up to the same $2 million maximum
- All applicants must indicate that business revenue declined by at least 25% in any quarter of 2020 compared to the same quarter in 2019. Applicants can utilize annual business revenue in 2020 as compared to 2019 but the same 25% test applies.
Congress has set aside funds for new and smaller businesses and for those located in underserved communities as well as for smaller banks and lenders.
As has been commonplace with the Paycheck Protection Program, additional guidance is expected.
Cullari Carrico LLC remains committed to assisting our clients, friends and communities during these uncertain times and has a dedicated team in place that can assist with any questions you have related to this or other COVID-19 related government programs. We invite you to contact us if you have questions or concerns.