On January 6, 2021, the Small Business Administration (SBA) released additional guidance for the Paycheck Protection Program (PPP), which was expanded under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act that formed a key part of the Consolidated Appropriations Act, 2021 (CAA). This additional guidance indicates that lenders are authorized to re-open their portals and application processes to allow small business borrowers to apply both for new First Draw PPP Loans and for Second Draw PPP Loans through March 31, 2021. Applications forms for the Second Draw loans and the updated First Draw loans are on the SBA’s website and closely resemble the original PPP application form.
The guidelines implement the new rules promulgated under the CAA and largely reiterate that the existing PPP guidelines will remain in place, except as otherwise amended by the CAA. The new guidance includes helpful information about additional ‘eligible costs’ for which PPP funds may be used, additional eligible classes of borrowers previously excluded from the PPP, and how certain borrowers can seek to re-apply for funds not taken or not available to them during the initial First Draw PPP application period. The guidelines also limit the maximum borrowing for affiliated borrower groups, and elaborate on a borrower’s access to a Second Draw loan if its First Draw loan is “under review.”
The SBA will soon make available Second Draw PPP Loans of up to $2 million to borrowers that have used, or will use, all of their First Draw PPP Loans, subject to the following rules and conditions:
The SBA is re-opening the PPP to allow small businesses that were previously ineligible, returned, did not accept, or did not receive all of the PPP loan funds available to them to get new PPP Loans or supplemental PPP funds as part of their First Draw PPP Loan:
The SBA’s regulations also clarified and created the following additional guidelines related to the PPP: