Second round of PPP loans to start week of Jan. 11

PROVIDENCE – The Paycheck Protection Program will reopen on the week of Jan. 11, the U.S. Small Business Administration announced Friday in consultation with the U.S. Treasury Department.

The reopening will cover new borrowers starting Jan. 11 at community financial institutions, as well as certain existing PPP borrowers starting Jan 13. The program will open to all participating lenders shortly thereafter SBA said.

In this round of loans, borrowers can set their PPP loan’s covered period to be any length between eight to 24 weeks to best meet their business needs. Loans will cover additional expenses, including operations, property damage costs, supplier costs and worker protection costs.

The typical maximum loan amount for a second draw loan will be the lesser of $2 million or 3.5 times the total monthly payment for payroll costs incurred or paid by the borrower during either 2019 or 2020.

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The program has also been opened up to 501(c)(6) organizations, housing cooperatives, and direct marketing organizations, among other previously ineligible organizations.

The SBA noted that the rules for the program have been altered to provide greater flexibility to companies with seasonal employees.

Certain existing PPP borrowers can request to modify their first draw PPP loan amount, as well, given the new guidance, and some are eligible to apply for a second draw loan.

The SBA’s new guidance says that second draw PPP loans are generally subject to the same terms, conditions and requirements of the first draw loans, including a five-year term, no collateral required, a guarantee percentage of 100%, and an interest rate of 1%.

The SBA reiterated that PPP loan forgiveness amounts are being excluded from being taxed as income, and should be excluded from a borrower’s gross receipts, ensuring the effectiveness of the second draw program by preventing a borrower from being disqualified for receiving forgiveness for a first draw loan. Second draw loans are also eligible for forgiveness on the same terms and conditions as first draw loans.

To be eligible for a second draw loan, companies must have fewer than 300 employees and need to demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

The SBA also noted that it had released guidance on accessing capital for minority, underserved, veteran and women-owned businesses that can be found here.

Chris Bergenheim is the PBN web editor. You may reach him at