By Ben Olson
Reader Staff
When Congress passed the CARES Act in 2020, the Paycheck Protection Program provided invaluable financial assistance to help struggling businesses retain their employees. Now, another round of PPP funds are available for businesses to help them weather the COVID-19 pandemic as it nears its one-year anniversary.
In coordination with the U.S. Treasury Department, the Small Business Administration began accepting applications for the Second Draw PPP Loan Jan. 13 and will continue to accept them until March 31. Committed to providing assistance to small businesses hit hard by the pandemic, the SBA has allocated at least $25 billion for this second PPP loan to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods.
The Second Draw PPP Loan can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 and certain supplier costs and expenses for operations.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower previously received a First Draw PPP Loan and will or has used the full amount only for authorized purposes; has no more than 300 employees; and can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
To apply for a Second Draw PPP Loan, a borrower will need to complete an application, provide documentation showing a 25% or more decline in business from comparable quarters in 2019 and 2020 and provide the lender with the First Draw PPP Loan number. Talk to your banker or tax accountant for more information about how to apply for this assistance.
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