Government Reopens Paycheck Protection Program

The second round of forgivable loans is open to new and past applicants.

January 12, 2021

WASHINGTON—This week the U.S. Small Business Administration and the Treasury Department reopened the Paycheck Protection Program to new borrowers and certain existing PPP borrowers, reports the Wall Street Journal.

The first loans are available for small businesses in underserved communities. Second-time borrowers, including businesses, some nonprofit organizations, self-employed workers and independent contractors, can apply starting Wednesday, Jan. 13. Available funds in this second round of PPP total $284 billion, which was funded as part of the $900 billion pandemic relief measure signed Dec. 27.

Much like the program’s first iteration, aid will be in the form of forgivable loans, but there are key changes on some issues, including eligibility for second-time applicants and types of forgivable expenses. Existing PPP borrowers may apply for a second loan if they have 300 or fewer employees and can demonstrate that they experienced a 25% reduction in gross receipts during a quarter in 2020 compared with the same quarter in 2019. Returning borrowers must have used or will use the “full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement” of the second loan, according to interim program rules.

First-time PPP borrowers must meet the program’s original eligibility rules. The original PPP was generally open to businesses with up to 500 employees, and there was no requirement to demonstrate a revenue loss. The more restrictive requirements for second loans reflect a consensus among lawmakers that the program’s restart should focus on businesses hit hardest by the pandemic.

“The PPP was a vital lifeline to many small convenience operators when it originally came online, and we are happy to see it restarted in a way that will provide assistance to some of those who are still recovering,” said Jon Taets, director, government relations, NACS. “We were also happy to see that Congress heeded the call from NACS and others to clarify that PPP borrowers could deduct expenses from their taxes.”

According to Forbes, deductions are allowable if a borrower uses forgiven PPP loan money to pay for them. Congress has said that the whole point of the program was to provide needed loan money for wages and other key expenses.

Borrowers are still required to spend at least 60% of the funds on payroll to receive full forgiveness. The other 40% may be used on eligible costs, such as certain mortgage expenses, rent and utility payments. Forgivable expenses have been expanded to include expenditures for personal protective equipment and other gear to protect workers, supplier costs, operations expenditures and property damage costs stemming from public disturbances during 2020.

Businesses seeking PPP loans can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. More information is available from the U.S. Small Business Administration.

Coronavirus Resources

NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.