The Paycheck Protection Program has been reestablished with $137 billion for second draw loans for still struggling small business owners. Second-draw PPP loans are open to businesses that applied for the first round of money back in the spring of 2020. PPP loans look to create a second infusion of money to small businesses that are still struggling with the ongoing economic impact that the COVID-19 pandemic has produced. Application for second- draw PPP loans are through community financial institutions (links below to find a lender or talk to your banker).
Some of the loan highlights include:
- Apply for up to $2 million for eligible expenses.
- 1% annual percentage rate with maturity of 5 years
- Up to 100% can be forgiven if used for designated expenses while maintaining salaries and headcount for the covered period.
- No collateral or personal guarantees are required.
- SBA reopened on January 13, 2021 for the 2nd round once the money is gone its gone so you may want to apply earlier.
- While $284 billion is set aside, $25 Billion is being set aside to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less in low- or moderate-income neighborhoods. And $60 million of that is set aside for businesses that did not get a loan the first time.
- Funds can be used to pay for salaries, mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 and certain supplier costs and expenses for operations.
- For most borrowers, the maximum loan amount for the 2nd draw is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the accommodation and food services sector the maximum loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million
Who may qualify for second round of PPP?
- 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.
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Where to apply:
Advisory services offered through Capital Asset Advisory Services, LLC, a Registered Investment Advisor. This material has been prepared for informational purposes.