SBA and Treasury announce re-opening of PPP loans for businesses

The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, have reopened the Paycheck Protection Program (PPP) for new borrowers and certain existing PPP borrowers.

The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility has been released in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.

During the first round of PPP, many South Shore businesses took advantage of the loans to help them survive during the pandemic. They received between $566 and $2,139,252 in South Lake Tahoe, Calif., $123 to $3,700,785 in Zephyr Cove and Stateline, Nev. A total of $13,661,100 went to seven businesses receiving the biggest PPP during the first round with dozens more below them.

“Greater Nevada was pleased with funding over $14 million in the Lake Tahoe basin in the round one of PPP. Due to the advanced notice, rollout and guidance with round 2, we expect a much higher turnout exceeding 20 million in the basin. Please stay tuned to our website as things are scheduled to go live Wednesday the 13th,” said Jeremy Gilpin, executive vice president of Greater Nevada Commercial Lending.

Greater Nevada is offering the PPP 2 applications and will have a website available for business to apply directly there.

"The SBA is allowing the smaller banks to apply first. To qualify, you must show that your business had a reduction of at least 25% in Gross revenues in at least one quarter in 2020 compared to the same quarter in 2019. Calculations for the loan amounts are the same as the first round and you can use 2019 or 2020 calculations (except that restaurant industry with a NAICS code starting with 72 can using a multiplication factor of 3.5 vs 2.5)," said Scott Peters, a South Lake Tahoe CPA with Altius.

This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.

“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said Administrator Jovita Carranza. “Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”

“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin. “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”

Key PPP updates include:

- PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
- The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations;
- The PPP provides greater flexibility for seasonal employees;
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.

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 percent reduction in gross receipts between comparable quarters in 2019 and 2020.

SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.

- PPP loans have an interest rate of 1%.
- Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.
- Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower's loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees.

For more information on how to apply, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.