The Small Business Administration and the Treasury Department are preparing to revive the PPP five months after its first two rounds of funding ended.
In the latest round, businesses that received loans last year will be able to borrow up to $2 million as long as they have no more than 300 employees and suffered at least a 25% drop in quarterly revenue. First-time borrowers with no more than 500 workers will be able to borrow up to $10 million.
The loans, which can be forgiven, will have five-year terms and carry an interest rate of 1%.
The SBA will initially accept only applications submitted by community financial institutions, or CFIs, lenders whose customers are minority-owned and economically disadvantaged businesses. Starting Monday, applications for first-time borrowers submitted by these lenders will accepted, and on Wednesday, applications for second loans. The SBA said it would begin accepting applications from all its lenders within a few days of that initial period reserved for CFIs.
As with the first two rounds of the PPP, applications must be submitted online at banks and other SBA-approved lenders. All applications must be submitted and approved by March 31. Loan amounts are calculated using a company’s payroll expenses; businesses can use either their 2019 or 2020 payroll to compute how much they can ask for.
Companies will have 24 weeks from the date they receive a loan to use the money. While 60% of the proceeds must be used for payroll in order for loans to be forgiven, companies can use the rest for employee health benefits, mortgage interest, rent, utilities and expenses that are essential to business operations.
The PPP is being restarted under the coronavirus relief bill Congress approved in late December, providing for $284 billion in new loans. The first two rounds, which began April 3 and ended Aug. 8, gave out more than 5.2 million loans worth $525 billion.