The SBA, Small Business Administration, announced that the second round of PPP Loans would resume on January 11th, 2021.
In 2020, the federal Small Business Administration offered the first round of Paycheck Protection Program, PPP, Loans designed to provide relief funding to small businesses and self-employed people who meet program size standards. This particular loan is meant to incentivize small businesses to keep workers on payroll and will be eligible for full or partial forgiveness if the money is used according to the SBA stipulations.
The money available is to be used for qualifying costs including payroll, rent, mortgage interest, or utilities.
As of Monday, January 11th, 2021, applications for the second round of loans will be accepted. In their notice, the SBA wrote that “At least $25 billion is being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate-income neighborhoods”.
For this round of PPP funding, the SBA allows business owners to use average payroll costs from either 2019 or 2020, whichever is higher. The average monthly amount will be multiplied by 2.5x to give you your loan amount. Restaurants are an exception and will receive 3.5x the monthly average.
To be eligible, you must have had at least one quarter in 2020 where your revenue was at least 25% lower than the previous year’s same quarter.
To apply for a PPP Loan, you will need to fill in the application, which you can find here, and verify the following information:
- Your average monthly payroll costs
- That you had employees on or before February 15th, 2020
- That your business was operational on or before February 15th, 2020
- Your personal and business information