New coronavirus relief bill will provide $284 billion in loans for small businesses

December 30, 2020

President Donald Trump has signed into law a new $900 billion coronavirus relief and stimulus package passed by Congress. The package includes an extension of last spring’s Paycheck Protection Program, allowing another $284 billion or so in forgivable, federally backed loans for ailing small businesses.  

There will be $284 billion in forgivable PPP loan funds available, both for some businesses that already got PPP loans as well as others that missed out in round one.  The PPP program has been extended through March 31, 2021 with several changes to PPP provisions to target the additional funds to the hardest-hit small business and non-profits.

PPP applicants will have between eight and 24 weeks to use the funds, with at least 60 percent going toward payroll and the rest toward eligible expenses like rent and utilities.  The bill expands the type of covered expenses.

New PPP loans are capped at $2 million, compared to $10 million before. Applicants must have no more than 300 employees and must demonstrate at least a 25 percent drop in revenues from the fourth quarter of 2019 to the same period this year.

If I already got one loan, can I get another one?

Yes. These are called “second draw” loans, and as long as you meet the qualifications above, you can apply. The deadline for all new loans is March 31.

New loan amounts are determined by a formula that involves payroll costs multiplied by a factor of 2.5 (again, capped at $2 million). Restaurants and other hospitality businesses may multiply those costs by 3.5, making them eligible for slightly more funding.

A few other updates to the the latest Paycheck Protection Program under the new stimulus package:

• Adds certain operations expenditures, property damage costs, supplier costs, and covered worker protection (PPE) expenditures to the eligible and forgivable uses of PPP proceeds;
• Simplifies the forgiveness process for loans of US $150,000 or less;
• Modifies the maximum PPP loan amount to 3.5 times average monthly payroll, rather than 2.5 times, for small businesses in the restaurant and hospitality industries;
• Removes the requirement that the amount of a Borrower’s Economic Injury Disaster Loan (EIDL) Advance Grant be deducted from PPP forgiveness;
• Provides that forgiven PPP loans will not be included in a Borrower’s taxable income, and that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan;
• Provides the ability for a PPP Borrower to request an increase in their first-draw PPP loan amount in the event they returned any or all of their first-draw PPP loan or did not accept the full first-draw PPP loan amount;
• Creates a dedicated US$15 billion set-aside for lending through community financial institutions to increase access for minority-owned and other underserved small businesses and non-profits;
• Creates a set-aside for very small businesses with 10 or fewer employees and for small businesses located in distressed areas; and
• Expands PPP eligibility for more critical access hospitals, local newspapers and TV and radio broadcasters, housing cooperatives, and 501(c)(6) non-profits, including tourism promotion organizations and local chambers of commerce.

These revisions will apply to any PPP loan made before, on, or after the date this Act was signed in law unless the PPP Borrower has already received forgiveness for the PPP loan.

EIDL Grants: The new law reopens the $10,000 EIDL Grant program. Priority for the full amount of the EIDL grant will be given to small businesses with less than 300 employees, located in low-income neighborhoods, who have experienced a 30% reduction in gross receipts during any 8-week period between March 2, and December 31, 2020 compared to a comparable 8-week period before March 2. If you meet this description and received a grant that is less than $10,000 you can reapply to receive the difference.

To learn more, visit:  U.S Chamber of Commerce Resource Guide