Everything You Need to Know About the New Round of PPP Loans for Businesses

By Jemima McEvoy Monday, January 11, 2021

After months of standstill, the US government agreed on a new federal aid package in late December. Amid the massive $2.3 trillion sum is $284 billion to be directed toward small businesses as part of the Paycheck Protection Program (PPP). Here’s everything you need to know about this round of loans: when they’re available, who qualifies, and how to apply.

When Are the Loans Available?

The loans program reopened Monday, according to guidance issued by the Small Business Administration (SBA) on Jan. 8. However, unlike the last round, the SBA and the US Treasury Department have opted to stagger the reopening of the PPP.
The money will first go to community financial institutions, like banks and credit unions that lend in low-income communities. These institutions, which make up roughly 10% of eligible lenders — will be able to start accepting loan applications starting January 11 for entities seeking their first PPP loans.

Then on January 13, those same lenders will be allowed to start processing the second round of loans for businesses and nonprofits whose initial supply has run dry.

Finally, once those two steps are done, PPP loans will be available for all other eligible and participating lenders or borrowers.

Who Qualifies for PPP Loans?

There have also been eligibility changes for this round of PPP loans. More money ($60 billion) has been set aside for businesses that weren’t able to access the program the first time around, while $30 billion has been preserved to boost the capacity of lenders in under-served areas.

Now, only firms with 300 employees or less — down from 500 — will be eligible for loans. The maximum loan amount has also decreased: from $10 million to $2 million. Businesses applying for these loans will have to prove that their revenue declined by at least 25% during one-quarter of the pandemic compared to the year prior.

However, it is much easier to apply for loans of less than $150,000. Furthermore, housing cooperatives, direct marketing organizations, and 501(c)(6) organizations are now all eligible to apply. Meanwhile, PPP loans are more flexible in terms of how recipients can use them: they can cover more expenses like property-damage costs, supplier costs, and personal protective equipment for a company’s employees.

It’s also worth noting that it’s easier to apply for loan forgiveness. PPP borrowers must spend no less than 60% of their funds on payroll over either eight or 24 weeks to be eligible for full forgiveness.

How to Apply

The SBA and US Treasury published the forms online on Friday. They can all be found in one place on the Journal of Accountancy website.

Final Takeaways

If your company saw revenue decline significantly during the pandemic, it’s worth looking into applying for a PPP loan. This aid will be a big source of relief for the scores of businesses still suffering nearly a year into the pandemic, fearing that there is no end in sight — or if there is, they may not make it there.

About the Author

Headshot for author Jemima McEvoy

Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.

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