Payroll Protection Program – Round Two

The Small Business Administration will begin accepting applications for the second round of loans from the Payment Protection Program, this week.

“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin.  “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19.  We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”

The $900 billion pandemic relief bill signed into law at the end of last year by President Trump allocated $284 billion for the program. The program has changed some since the first round. During the first two days of the loan application period, priority will be given to small businesses in low-income communities that may not have gotten access to funds in the first round.

Jan 11 – Open for First Time Borrowers (companies that did not take the benefit during the first go round in 2020) through Community Financial Institutions. There are two certified Community Financial Institutions in Savannah: Savannah Business Assistance Center (SBAC) and Carver State Bank.

Jan 13 – Open for Second Time Borrowers. Second time borrowers should go through the provider they used last time, to simplify the “forgiveness program”.

First-time borrowers are still bound by the terms of the initial round. This time around, loans are capped at $2 million, down from the previous $10 million maximum.

Second-time borrowers must meet more stringent qualifications, such as having no more than 300 employees, and show that revenue declined at least 25% in any quarter in 2020 compared with 2019. Re-applying companies should have also used the full amount of their first loan by the time they receive the second.

For those who may not be familiar with the “PPP” Loan Offering: SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. You apply through your bank, a community financial institution, or online through a portal like Kabbage. Note: quite a few Creative Coast members has success in round 1 using Kabbage.

  • PPP loans have an interest rate of 1%.
  • Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.
  • Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).
  • No collateral or personal guarantees are required.
  • Neither the government nor lenders will charge small businesses any fees.