A second round of low-interest and potentially forgivable federal loans to businesses hit hard because of the COVID-19 pandemic is underway.
The Small Business Administration began accepting loan applications for Second Draw Paycheck Protection Program Loans on Wednesday, Jan. 13, and will accept them until March 31, according to the SBA website.
The new program is part of the $900 billion COVID-19 relief bill that was signed into law on Dec. 27. Congress approved the first PPP as part of the CARES Act in March 2020, with a $250 billion replenishment in April 2020.
The new PPP has $284.5 billion available, including $35 billion for first-time loans, according to the Journal of Accountancy.
Patrick Fulbright, director of the University of Georgia’s Small Business Development Center in Gainesville, encouraged participants in a teleconference Tuesday, Jan. 19, to apply as soon as they can.
“It’s a small window,” he said, speaking at the Greater Hall Chamber of Commerce-sponsored event.
The SBA has, as needed for interested businesses, a free online tool on its website that connects small businesses with SBA-approved lenders, as well as a map showing eligible PPP lenders.
“My recommendation is to pull together your financial information and be ready when the bank (online) portal is open,” he said. “The information (needed) is nearly identical to what you did for PPP1. The math isn’t too much different.”
All Second Draw loans “will have the same terms regardless of lender or borrower,” according to the SBA.
Similar to the first loan, the new loans can be used to help fund payroll costs, including benefits, as well as mortgage interest, rent, utilities, worker protection costs related to COVID-19.
The second loan amounts also can be used for “uninsured property damage costs caused by looting or vandalism during 2020,” according to the SBA.
A borrower is generally eligible for a Second Draw loan if the borrower received the first loan and “will or has used the full amount only for authorized uses. Also, the borrower can have no more than 300 employees and can show at least a 25% reduction in gross receipts between comparable financial quarters in 2019 and 2020.
Eligible borrowers can qualify for full loan forgiveness if certain conditions are met, including that at least 60 percent of proceeds are spent on payroll costs.