- SBA and Treasury announce that Paycheck Protection Program will open the week of Jan. 11
- Lending will be limited to CDFIs in the program’s early days before expanding to all lenders
- Recent guidance offered clarifications on a number of aspects of the program
Businesses may begin applying for funds under the newly revived Paycheck Protection Program starting on Monday, Jan. 11, according to a joint announcement from the U.S. Small Business Administration and Treasury Department.
The departments said that in accordance with recently released guidance, only community development financial institutions will be able to make PPP loans in the program’s early days. These lenders are permitted to issue “first draw” loans to new borrowers on Jan. 11 and second draw loans to borrowers who previously received PPP funding on Wednesday, Jan. 13. The program will open to all participating lenders “shortly thereafter.”
As part of a $900 billion stimulus package passed last month, $284.5 billion will go toward forgivable PPP loans. The program has also been significantly overhauled. While eligibility for new loans has expanded, encompassing entities such as nonprofits and news organizations, funding is now targeted at small businesses with 500 or fewer employees.
Those who previously received funding must have fewer than 300 employees and be able to demonstrate a year-over-year revenue loss of at least 25 percent for any quarter of 2020. They must also have used up all of their initial loan, or plan to do so.
The SBA and Treasury recently released guidance on the new program, which included clarifications on eligible uses for PPP funds, excluded borrowers, seasonal businesses, self-employed workers, and more.
