As part of the $900 billion stimulus package signed into law on December 27, 2020, the Paycheck Protection Program (PPP) has been renewed with $284.45 billion set aside for new applications. The loan program reopened on January 11 for first-time borrowers and will begin accepting applications from borrowers who qualify for Second Draw PPP Loans starting on Wednesday, January 13. Initially, only community financial institutions will be able to take applications, but the PPP will open to all participating lenders soon thereafter.

The Small Business Administration (SBA) has issued updated guidance for the PPP reflecting the changes made by the December relief bill. The key updates are as follows:

• PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks;
• PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenses;
• Eligibility is expanded to include 501(c)(6)s, housing cooperatives, and destination marketing organizations, among other types of organizations;
• Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
• Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan. 

Additionally, the IRS released updated guidance allowing for the deductibility of business expenses paid for by PPP loan funds.

As a reminder, PPP loans can be used to fund payroll costs including benefits and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, as well as certain supplier costs and expenses for operations. If you are self-employed, an independent contractor, a sole proprietor, or a real estate brokerage with 500 or fewer employees, you could be eligible. For more information about the First Draw Loans and forgiveness terms, you can click here, and if you are eligible, you can access the application here until March 31, 2021.

In order to be eligible for a Second Draw PPP Loan, a borrower must have previously received a First Draw PPP Loan, in which the full amount has been or will be expended for authorized uses; have no more than 300 employees; and can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. For more information about the Second Draw Loans and forgiveness terms, you can click here, and if you are eligible, you can access the application here and apply starting January 13 until March 31, 2021.