The Paycheck Protection Program (PPP) of forgivable loans has officially re-opened this week due to the new guidance recently issued by the U.S. Small Business Administration (SBA) and United States Treasury. First-time borrowers and second-time borrowers are now eligible to apply for additional assistance under specific guidelines.

The PPP loan portal will re-open to PPP eligible lenders with $1 billion or less in assets for First and Second Draw applications on Friday, January 15, 2021. The portal will fully open on Tuesday, January 19, 2021 to all participating PPP lenders to submit First and Second Draw loan applications to the SBA. It will remain open through March 31, 2021.

First Draw and Second Draw Loans, Explained

First Draw PPP Loans
First draw PPP Loans can be used to help fund payroll costs, mortgage interest, rent, utilities, and worker protection costs related to COVID-19. First Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8 to 24 week covered period following loan disbursement:

• Employee and compensation levels are maintained;
• The loan proceeds are spent on payroll costs and other eligible expenses; and
• At least 60 percent of the proceeds are spent on payroll costs.

Who is eligible to apply for First Draw PPP Loans?

• Eligible small entities that have 500 or fewer employees.
• Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may: (1) reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or (2) request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.

Second Draw PPP Loans
One of the biggest changes with the new PPP is that Congress made funding available to businesses that had previously received a PPP loan. Borrowers are eligible for a second-draw PPP loan of up to $2 million, provided they have:

• 300 or fewer employees.
• Used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be disbursed to the borrower. The Interim Final Rule (IFR) also clarifies that the borrower must have spent the full amount of the first PPP loan on eligible expenses.
• Experienced a revenue reduction of 25% or more in all or part of 2020 compared with all or part of 2019. This is calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019, or, in a provision added in the IFR, a borrower that was in operation for all four quarters of 2019 can submit copies of its annual tax forms that show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.