IMPORTANT UPDATE FOR 2021:
Congress approved an extension of the PPP loan program until June 30, 2021, including “second draw” PPP loans for businesses that received PPP funding in 2020. There are simpler rules and a new application form. Please click for more details about PPP loans in 2021.
In late December 2020, Congress passed a bill approving a re-funding of the PPP and EIDL programs under the CARES Act. President Biden signed an application deadline extension on March 30, 2021. The new application deadline is now May 31, 2021.
There will be overwhelming demand (as in the first and second rounds) and the ~$300 billion main pot of funding will likely be spoken for within weeks. Due to the stipulations of the second round of funding, an additional $60 billion in funds that can only be distributed via a specific subset of lenders (intended to reach a wider variety of businesses) will likely last a bit longer. However, be sure to apply quickly as the new application deadline is now May 31, 2021.
The April 2020 package contained roughly $310 billion to replenish the Paycheck Protection Program (PPP), including $60 billion that must be routed through lenders that serve hard-to-reach or minority groups, an additional $10 billion for the EIDL grant program, as well as an additional $50 billion for the Small Business Administration’s disaster relief fund for disaster/economic injury loans, in addition to allowing agricultural/rural businesses access to these types of funds.
For 2021, more types of businesses are eligible for PPP loans, and the application process has been simplified.
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Since there is such a huge demand for emergency funding from America’s small businesses, we expect that President Biden will approve at least one more round of funding in 2021 as well.
Key PPP updates for 2021 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, destination 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.
What does new PPP / EIDL funding mean for your business?
Economic Injury Disaster Loan (EIDL) grants:
The initial $10 billion EIDL grant funding ran out quick, but once the renewed EIDL application process is reopened (it isn’t currently) you can submit a request for for a $10K grant to help your small business weather this crazy financial storm. Even if you’ve applied for a PPP loan, you can still apply for an EIDL grant, and vice versa.
There are very few strings attached — even if you do not qualify for a larger loan, this $10,000 will be yours to keep so long as you meet basic eligibility requirements.
Read more about the EIDL loan/grant program.
Paycheck Protection Program (PPP) loans:
The initial $350 billion in PPP funding was quickly allocated to approximately 1.6 million American businesses, and the second round of funding also ran out extremely fast. Luckily for small businesses struggling due to COVID-19, the PPP program application deadline has been extended until May 31, 2021.
HOWEVER, if you haven’t completed your PPP loan application, we urge you do so with all possible dispatch. It’s important to get your application submitted ASAP because when your PPP loan is approved, you’re assigned an E-TRAN number that effectively holds that money in reserve for you and counts it as “spent.” If you don’t have an approved PPP application and an assigned E-TRAN number, you won’t get your money.
Other SBA disaster loans:
The act includes an additional $50 billion in funding for SBA disaster relief loans, so even if you don’t get approved for a PPP loan or an EIDL grant, you may still qualify for an SBA disaster loan. Read more about available emergency funding options here.
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