The U.S. Small Business Administration re-opened the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with $1 billion or less in assets for First and Second Draw applications on Friday, January 15, 2021 at 9 a.m. EST. However, the portal is now fully open to all participating PPP lenders to submit First and Second Draw loan applications to SBA.
Earlier last week, SBA 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 as part of the agency’s ongoing efforts to reach underserved and minority small businesses.
Last Friday, the SBA continued its emphasis on reaching smaller lenders and businesses by opening to approximately 5,000 more lenders, including community banks, credit unions, and farm credit institutions. Moreover, the agency also plans to have dedicated service hours for these smaller lenders after the portal fully re-opens next week.
First Draw PPP Loans are for those borrowers who have not received a PPP loan before August 8, 2020. The first round of the PPP, which ran from March to August 2020, was a historic success helping 5.2 million small businesses keep 51 million American workers employed.
Second Draw PPP Loans are for eligible small businesses with 300 employees or less, that previously received a First Draw PPP 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 PPP loan is $2 million.
ECONOMIC INJURY DISASTER LOAN (EIDL)
The new law reopens the $10,000 EIDL Grant program. Small businesses with less than 300 employees, located in low-income neighborhoods, who have experienced a 30% reduction in gross receipts during any 8-week period between March 2 and December 31, 2020 (relative to a comparable 8-week period before March 2) will get priority for the full EIDL grant amount. If you meet this description and received a grant that is less than $10,000, you can reapply to receive the difference.
SBA LOAN DEBT FORGIVENESS
The new law resumes the government payment of monthly principal and interest on small business loans guaranteed by the federal Small Business Administration (SBA) under the 7(a), 504, and Microloan programs. Borrowers with loans approved by the SBA prior to 2020's CARES Act will receive an additional three months of payments beginning in February of 2021. Those payments will be capped at $9,000 per borrower, per month.
Remember every case is different. For advice, please contact your banker, CPA and attorney.
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