The Small Business Administration (SBA) has announced that it is re-opening the Paycheck Protection Program (PPP) loan portal to small lenders on January 15 and to all lenders on January 19 [U.S. Treasury Department Press Release, 01/13/21].
Background. On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA) was signed into law. It contains extensions and expansions of the PPP, a popular provision with many small businesses included in the Coronavirus Aid, Relief and Economic Security (CARES) Act that allows eligible employers to obtain forgivable loans for certain payroll and nonpayroll purposes. Notable changes from the CAA include authorizing $284 billion towards the PPP, extending it to March 31, 2021 and allowing for Second Draw loans for certain smaller businesses that initially received a PPP loan (see Payroll Guide ¶20,913).
First and Second Draw loans. First Draw loans are for those borrowers who have not received a PPP loan before August 8, 2020. Second Draw loans are for eligible small businesses with 300 employees or less, that previously received a First Draw loan and will use or have used the full amount only for authorized uses, and that can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The maximum amount of a Second Draw loan is $2 million.
PPP portal re-opening. Now, the SBA, in consultation with the U.S. Treasury Department, has announced the re-opening its PPP loan portal. On January 15, 2021, PPP-eligible lenders with $1 billion or less in assets may begin submitting First and Second Draw loan applications. On January 19, 2021, the portal will fully open to all participating PPP lenders to submit First and Second Draw loan applications to SBA.
“As the Program re-opens for all First and Second Draw borrowers next week, the PPP will allow small businesses to keep workers on payroll and connected to their health insurance,” said Secretary of the Treasury Steven T. Mnuchin.
Dedicated access for underserved and minority businesses. In an effort to reach underserved and minority businesses, the SBA has already granted dedicated PPP access to Community Financial Institutions (CFIs), which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries.
On January 15, the SBA will continue its efforts on reaching smaller lenders and businesses by opening to approximately 5,000 lenders, including community banks, credit unions, and farm credit institutions. In addition, the SBA plans to have dedicated service hours for these smaller lenders after the portal fully re-opens on January 19.
