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PPP is back in 2021. Here are the details on getting a second small business loan

The Paycheck Protection Program is reopening for businesses on Jan. 11. This time, community financial institutions are going first and businesses can seek a second loan.

Small businesses need support. (Pexels/Kaique Rocha)

As we enter 2021, the U.S. still facing an economic recession and massive unemployment as a result of the continuing COVID-19 pandemic. That means relief packages we were introduced to in 2020 will continue, too.

That includes one program that was widely used: The U.S. Small Business Administration (SBA) said Friday that it will reopen the Paycheck Protection Program (PPP) on Monday, Jan. 11. This year, businesses can apply for a second draw. That means businesses that got a loan last year can get a second draw in 2021.

This comes a couple of weeks after Congress passed a new $900 billion relief bill that included $284 billion to restart PPP. It included some new provisions, and that’s reflected in the rollout.

For one, the first PPP program was widely used, but proved to be less accessible to sole proprietors and entrepreneurs who didn’t have prior banking relationships. This led to data that showed women and minority-owned businesses largely weren’t as helped by the program.

That’s resulting in some reprioritizing this time around. SBA is reopening the loans first to community financial institutions that serve women and minority-owned businesses to provide loans come Monday, and the bill includes specific funding for these lenders. Other lenders, like banks, won’t be able to offer loans until after Wednesday, Jan. 13. (As shown in the tweet below, the specific reopening date has yet to be announced). In all, the program will be open until March 31.

In line with the new bill, SBA said in guidance issued this week that eligibility for a “Second Draw” loan requires that a business received a first loan and “will or has used” all of the money. It also needs to demonstrate a 25% reduction in gross receipts between between quarters in 2019 and 2020. Businesses also must have fewer than 300 employees.

It’s among a number of new provisions for PPP, taxes and other business aid programs outlined in the new relief bill. Check out a wider look at the legislation here.

Correction: This post originally said PPP will reopen for all lenders on January 13. In fact, the reopening date for lenders beyond community financial institutions has yet to be announced. (Updated 10:20 p.m., 1/10/2021) 
Companies: U.S. Small Business Administration

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