Small businesses that are still struggling to keep up with the devastation that 2020 brought can apply for the Paycheck Protection Program loan which is re-opening on Monday.

The federal loan will first be available to businesses that apply at the community financial institutions. These institutions include banks and lenders that usually fund small businesses in communities that faced challenges in securing loans during the initial rounds of the PPP lending.

The program will also be opened to other small businesses according to the Treasury and the Small Business Administration. However, no exact date has been provided but the Consumer Bankers Association expects the program to start during the January 18th week.

Covid Relief Package

The last Covid relief package signed at the end of December budgeted for additional lending to eligible small businesses.

Small businesses that had received previous rounds of the loan can still apply for the loan. The amount set aside for this lending was $284 billion.

The package also comprised measures that would ensure the PPP loans are more flexible, more accessible, and more helpful to the most affected restaurants and all other small businesses compared to the first rounds of the lending.

The Changes in the Current PPP Loan

Businesses can apply for the second PPP loan. This is applicable to businesses that are not public companies and have less than 300 employees. These businesses are required to have used the first PPP loan in an authorized way and be able to prove that it experienced a 25% drop in the receipts of the Q1, Q2, or Q3 if compared to the same quarter in 2019.

The most vulnerable businesses are targeted. $15 billion to $25 billion have been set aside for community development financial institutions which usually lend to; minority-owned businesses, businesses with less than 10 employees as well as those located in low-income areas.

Restaurants will get bigger loans. While other eligible businesses can get loans that are 2.5 times the average of their monthly payroll expenses, restaurants and lodgings can get loans that are worth 3.5 times their monthly payrolls.

This PPP loan has greater flexibility. Unlike, previous PPP loans, this third round PPP loan can be forgiven if at least 60% of it is used on payroll expenses while the remaining 40% is used to cover other business expenses. The loan also covers personal protective equipment as well as expenses brought about by Covid19 restrictions.

The forgiveness process has been simplified. This time around, businesses can be forgiven by simply submitting a one-page certification that contains information such as the number of employees retained, amount of loan spent on payroll, and the total loan amount.

This PPP loan has a bigger tax break for the recipients. The loan is tax-free for the loan recipients if used as authorized. Additionally, expenses like payroll and operating expenses if paid for using the tax-free loan will be counted as deductibles.


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