Key Highlights

  • Community lenders that specialize in working with women-led businesses and those run by Black, Latino, Asian and other minorities given priority by SBA to start processing loans today
  • Larger banks/lenders to begin processing loans “shortly”

The Small Business Administration (SBA) has given the popular Paycheck Protection Program (PPP) the green light as of today, Monday, January 11. First in line for applications and loan processing are community lenders that specialize in focusing on underserved borrowers including women-led businesses, and businesses owned by Black, Latino, Asian and other minority owners.

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The SBA said only that larger banks and lenders would be able to begin processing PPP loan applications “shortly.”

The decision to prioritize community lenders and historically underserved borrowers was motivated by complaints that first-go-around PPP funds not distributed equitably.

New PPP relief funding will be made available to BOTH first-time and returning borrowers. Check out these details:

  • Businesses must have suffered a -25% sales drop in at least one quarter of 2020, compared with 2019
  • First-time PPP borrowers can submit PPP loan applications on Monday, January 11
  • First-time borrowers are available to businesses with up to 500 workers
  • Second-time returning borrowers can submit PPP loan applications on Wednesday, January 13
  • Second-time returning borrowers can have NO MORE than 300 employees
  • Country’s largest banks (Wells Fargo, Bank of America, JPMorgan Chase, Cross River Bank) intend to begin taking applications and resume lending as soon as the SBA gives them the green light to do so
  • SBA authorized to guarantee PPP loans through March 31, 2021
  • The 24-week period of PPP loan distribution begins on day business starts receiving the loan

This revived PPP was awarded $284B in new funding to restart this relief effort. For those borrowers and lenders that are apprehensive about funds “running out,” an official with the Treasury Department said, “…we don’t anticipate the money to run out…” and that there will be enough money for all qualified borrowers’ needs.

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The PPP-redoux comes at a time when, in the month of December, US employers cut some 140,000, according to the US Labor Department. PPP loans, backed by the Treasury Department and issued via the SBA by lenders/banks, are designed to be forgiven as long as the borrowers use and provide documentation that the money is used to pay their workers.

The proceeds of a PPP loan can be used for:

  • Payroll costs – full 60% of PPP loan to be applied to payroll costs to keep workers paid and employed
  • Costs related to continuation of group health care
  • Mortgage interest payments – NOT prepayments or principal payments
  • Rent payments
  • Utility payments
  • Interest payments on debt obligations that incurred prior to February 15, 2020
  • Refinancing SBA EIBL loan between January 31 –
    April 3, 2020
  • Covered operations expenditures – software/cloud service that facilitates businesses/delivery/ payment processing/supply tracking, etc.
  • Covered property damage costs due to vandalism/looting
  • Covered supplier costs that essential to business operations
  • Covered worker protection expenditures such a personal protection equipment, combined air pressure ventilation/filtration system, sneeze guards, expansion of indoor/outdoor business space

For more specifics on the revived Payroll Protection Program, go this link:

https://home.treasury.gov/system/files/136/PPP-IFR-Paycheck-Protection-Program-as-Amended-by-Economic-Aid-Act.pdf

Thanks to the US Treasury Department and to

The New York Times.