This news is music to the ears of small business owners across the country. According to an announcement this week, the borrowing window has opened again. Business owners may now complete an application for a first or second draw. Since the first round of disbursements was depleted before many of the smaller businesses could gain access to funds, they may advance to the front of the line. The portal opens to the larger ones on January 19, 2021.
This round of PPP loans focuses primarily on helping minority-owned businesses, and those in lower-income areas that have been dramatically impacted by the pandemic. This decision comes on the heels of much criticism that grew out of the first round, as this underserved group was vastly overlooked. A staggering $280 billion in capital has been allocated to those businesses which need it most.
A business must have 300 or fewer employees, and if it received funds from the first round, the money should be exhausted – or is expected to be diminished in the very near future. The maximum amount of the loan may not exceed $2 million.
The SBA says that $25 billion will be set aside for Second Draw PPP Loans to eligible borrowers that have no more than 10 employees. Further, it will grant loans in the amount of $250,000 to eligible borrowers in low to moderate-income neighborhoods.
The second round of PPP is open to both businesses that received loans in the first round and those who did not.
Secretary of the Treasury Steven T. Mnuchin said in the SBA press release, “The PPP is already providing America’s small businesses hardest hit by the pandemic with vital economic relief. As the Program re-opens for all First and Second Draw borrowers, the PPP will allow small businesses to keep workers on the payroll and connected to their health insurance.”
The general loan terms will remain the same as stated in the first draw. Borrowers can be matched with qualified PPP lenders using SBA Lender Match. Second Draw PPP Loans may be used for payroll costs and employee benefits. It is permissible to use the funds to pay 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.
The professionals at Astute realize that this whole process can be overwhelming. If you need any assistance with your application – or have other financial impact-related questions – please us a call at (925) 452-2205 or contact us. One of our experts will be happy to discuss this at your convenience.
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