The U.S. Small Business Administration and the Treasury Department relaunched the Paycheck Protection Program on Monday to new borrowers, prioritizing loans from community lenders.
The program, funded with $284.5 billion thanks to the latest stimulus package passed by Congress late last month, opened Monday to so-called “first draw” PPP loans for those small businesses who didn’t take advantage of the program last year. “Second draw” PPP loans will be available starting Wednesday. Initially only community financial institutions will be able to make the first-draw and second-draw loans, but the SBA and the Treasury said Friday that the program would be open to other lenders shortly thereafter.
Ryan Strauser is a Principal and Principal for Marketing in the Ares Wealth Management Solutions Group. Prior to joining Ares in 2021, Strauser was a senior vice president at Black Creek Group in the Product Management Group where he focused on product management, positioning and due diligence efforts for the firm’s offerings.
Previously, Strauser was a vice president at Jackson National where he focused on new product development, investment selection and product positioning. Before that, he held similar positions at OppenheimerFunds (now Invesco), Old Mutual Capital and Great-West (now Empower). Strauser holds a bachelor of business administration in marketing from Wartburg College and a master of business administration from the University of Colorado.
Alex Selarnick is an associate at Goodwin who advises insureds, insurers, and insurtechs, as well as their lenders and investors on a broad range of compliance, regulatory and transactional matters. Mr. Selarnick’s practice focuses on the intersection of insurance and technology, and he frequently works with clients on the legal and regulatory challenges associated with the use of technology in the insurance space. Mr. Selarnick also has extensive trade credit insurance experience, and he guides market leading supply chain and trade finance companies on the development and negotiation of international credit insurance programs.
Greg Hoffnagle is a partner in Goodwin’s Financial Industry group and Insurance practice. Mr. Hoffnagle guides insurtechs, emerging and technology companies, venture capital and private equity firms and other insurance-related service companies through cutting-edge compliance, regulatory and transactional matters.
With a particular focus on the intersection of insurance and technology, a considerable part of Mr. Hoffnagle's advisory work involves working with technology clients in creating innovative products and bringing them to market quickly, from choosing an operating structure to licensing and regulatory issues. Mr. Hoffnagle is an experienced litigator for complex insurance and reinsurance related disputes, as well as international commercial arbitrations and internal investigations. He is also a trusted advisor for companies and institutions on risk management issues and complex insurance claims.
The goal is to increase the availability of loans to small businesses. When the program originally launched last year with the CARES Act, much of the money that was supposed to go to small businesses instead went to large companies who had existing relationships with large banks and the funds were quickly exhausted until Congress appropriated more money. The program will be open through March 31.
Under the latest stimulus legislation, businesses can now write off expenses associated with seeking loan forgiveness, and the IRS released guidance last week to allow that, reversing its previous guidance (see story). The SBA also released updated PPP guidance outlining other changes to the program to improve its effectiveness and accessibility last week in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, which was part of the overall stimulus and appropriations package.
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said SBA Administrator Jovita Carranza in a statement Friday. “Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”
Some of the main updates to the program include:
- PPP borrowers can set their PPP loan’s covered period to be any length between eight 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.
- PPP eligibility has expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, along with other kinds of organizations.
- The PPP now offers more flexibility for seasonal employees.
- Some existing PPP borrowers can request to modify their first-draw PPP loan amount.
- Some 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 percent reduction in gross receipts between comparable quarters in 2019 and 2020.
“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin in a statement. “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”
The new guidance released Friday includes:
- PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns;
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and
- Interim Final Rule on Second Draw PPP Loans.
Other new guidance released last week includes:
- Top-Line Overview of First Draw PPP Loans
- Top-Line Overview of Second Draw PPP Loans
- Procedural Notice – Modifications to SBA Forms 3506, 3507 and 750 CA (PPP only)
- Procedural Notice - SBA Procedural Notice on Repeal of EIDL Advance Deduction Requirement
Forms were also released, including Form 2483 – Paycheck Protection Program Borrower Application Form and Form 2483-SD – PPP Second Draw Borrower Application Form.
