Stimulus Bill Creates Second Draw PPP Loans

John Asbury

Cross River, a bank that delivers advanced financial and compliance products/services to the fintech industry, announced earlier this week t will be participating in the next round (Round B) of the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP). He urged every small business owner who needs assistance to apply for their first - or second - PPP loan as soon as possible. For larger applicants, the program will open "shortly thereafter", the SBA said Friday in a joint announcement with the U.S. Treasury Department.

The new pot of money sets aside $60 billion for businesses that haven't been able to access the process so far, and it focuses on companies with 10 or fewer employees or those in low-income areas.

Some PPP borrowers can request to modify their First Draw PPP Loan amount. Borrowers also need to prove that they saw a 25% reduction in gross receipts during a quarter in 2020 compared with the same quarter in 2019.

In New York's 18 Congressional District, over 11,070 small businesses utilized the PPP in the first round of loan disbursement, helping keep over 96,000 workers on the payroll.

Minority-led business owners have been at the end of the line when it comes to getting COVID-19 relief from the Paycheck Protection Program-but you can change that.

Once the program is rolled out, small businesses will have until March 31 to access new funds. Based on the language in the Act, it appears that the other means of eligibility for a small business to have qualified for a PPP loan, namely the revenue standards or the alternative size standard, will not be available to qualify for a second draw loan. Before you apply you need to have your 2019 and 2020 profit and loss statements to show revenue loss during 2020.

Ability to Apply for a Second PPP Loan.

The American Bankers Association is the voice of the nation's $21.2 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $17 trillion in deposits and extend almost $11 trillion in loans. The applications will go through a series of automated checks before a loan number is issued.

Firms that are eligible for a second loan will be capped at 300 employees, down from 500, and the maximum loan amount this time is $2 million, a decrease from $10 million. The process to get the loan forgiven is also simplified. But the second round provides more flexibility, allowing businesses to select any period between eight and 24 weeks.

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