2021 Paycheck Protection Program (PPP) – Round 2 – Now Open

The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers.

To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11 and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.

Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.

This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.

Key PPP updates include:

  • PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
  • 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 uses;
    • Has no more than 300 employees; and;
    • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Key Differences between Round One and Round Two

Any business that did not receive a PPP loan previously, or those businesses that experienced a 25% reduction in revenue in one quarter of 2020 over 2019, can apply for this new round of PPP.

Businesses, sole proprietors, and independent contractors applying for loans of $150,000 or less and based on the same calculation as round one—2.5 times one-month of 2019 payroll—do not have to submit new documentation if applying through the same lender.

New groups of eligible business, in this 2nd round, include 501c(6) organizations like chambers of commerce, nonprofits and religious entities, and local news organizations. These loans are also capped at $2 million.

The new law also carved out additional benefits for restaurants, hotels, and other businesses under the NAICS Code 72. These businesses can calculate their loan amount by multiplying one-month of 2019 payroll by 3.5 instead of 2.5, thus receiving more funds. This also applies to seasonal businesses and those without 12 months of operating history. Further, for restaurants and hotels with multiple locations, as long as each one has fewer than 300 employees, each individual location may apply for a separate loan. The maximum loan amount across all locations, however, is capped at $4 million.

In addition, the new law earmarked $15 billion in straight grants that do not need to be repaid for live entertainment venues, which were some of the hardest hit businesses due to Covid shutdowns. These businesses include theaters, museums, and zoos. It also includes businesses that represent performers.

Additional resources:

SBA Round Two PPP https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

US Treasury Round Two PPP https://home.treasury.gov/news/press-releases/sm1230

FAQ for Round Two PPP https://www.ghjadvisors.com/blog/faq-paycheck-protection-program-round-two-ppp-2

Forbes/All Business Round Two PPP Information https://www.forbes.com/sites/allbusiness/2021/01/08/new-guidance-issued-on-next-round-of-ppp-loans-an-overview-for-small-businesses/?sh=1a19ff9235eb

Local resources and contacts:

Eric Glymph, Financial Strategist/Founder
EDGe Business Planning
804-833-1792
Blog Link: https://www.edgebusinessplanning.com/financialedge/categories/edge-covid-19-resources
Webpage: www.EDGeBusinessPlanning.com

Local Banks Currently Offering PPP Loans

Chesapeake Bank
Davis Yonce, AVP, Regional Business Development Officer
804-939-6403
DYounce@ChesBank.com

Virginia Community Capital
Leah Fremouw, VP, Director of Community Innovations
804-939-6167
sba-ppp@vccva.org

Village Bank
Cindy Hodges, VP, Commercial Relationship Manager
804-419-1467
chodges@VillageBank.com

Fulton Bank
https://www.fultonbank.com/CARES-ACT

TOWNEBANK

Angie Collins
Senior Vice President, Private Banking Officer
9961 Iron Bridge Road
Chesterfield, VA 23832
Office: 804.324.2724
Cell: 804.349.3400
Fax: 804.425.7466
angie.collins@townebank.net

Betsy Lacy
Vice President, Commercial Banking Officer
9961 Iron Bridge Road
Chesterfield, VA 23832
804-324-2720
Cell: 804-801-6319
betsy.lacy@townebank.net

Ralph J. Martinez
VP, Commercial Banker
9961 Iron Bridge Rd
Chesterfield, VA 23832
Office: 804.324.2719 Fax: 804.477.600
Cell: 317.833.6248
ralph.martinez@townebank.net

Omaryz Martinez
Branch Manager
9961 Iron Bridge Rd
Chesterfield, VA 23832
Phone: (804)748-9700 | Fax: (804)425-7466
Omaryz.Martinez@Townebank.net