By Michelle Price
UCBJ Managing Editor
WASHINGTON – The deadline to apply for the popular Paycheck Protection Program (PPP), which was created last year to help small businesses weather the economic fallout of the COVID-19 pandemic, has been extended from March 31 to May 31. The law extends authorization of loans to June 30 to give the Small Business Administration (SBA) additional time to process applications.
The PPP now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP loan with the same general loan terms as their First Draw PPP loan.
Second Draw PPP loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 and certain supplier costs and expenses for operations.
A borrower is generally eligible for a Second Draw PPP loan if the borrower:
- Previously received a First Draw PPP loan and will 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
Maximum loan amount and increased assistance for accommodation and food services businesses
For most borrowers, the maximum loan amount of a Second Draw PPP loan is 2.5 times the average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (use NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP loan is 3.5 times the average monthly 2019 or 2020 payroll costs up to $2 million.
According to Caitlin Schmeer, director of Public Affairs at U.S. Department of the Treasury, the previous round of the PPP saved 51 million jobs. There was more than $522 billion loaned with 87% being loans of $150,000 or less.