Department of Economic Initiatives (DEI)

CONTACT INFORMATION: Our office is open 8:30AM-4:30PM M-F
703-324-5171 TTY 711
12015 Route 50, Suite 510
Fairfax, VA 22033
Rebecca Moudry
Director

Paycheck Protection Plan V2 Update

The Small Business Administration (SBA) has opened a new round of the Paycheck Protection Program (PPP), its forgivable loan program. The new legislation clears up some of the issues with the first round and allocates new money for first and second-time borrowers.  New borrowers working with community financial institutions in low-income areas can apply as of January 11 and second round borrowers can begin January 13. The PPP will open to all participating lenders shortly thereafter. More information can be found at  SBA.gov.  

COVID-19 Relief Bill Small Business Opportunities

SBA Is Reopening the Paycheck Protection Program (PPP) for First Draw Loans the Week of January 11, 2021. 

  • To promote access for smaller lenders and their customers, SBA will initially only accept loan applications from community financial institutions starting on January 11, 2021. The PPP will open to all participating lenders shortly thereafter.
    • Funds are expected to go quickly, so take the time now to gather your documents and choose your lender so you can be at the front of the line

PPP Loans are Available to First-Time Borrowers from the Following Groups:

  • Eligible small entities, that together with their affiliates that have 500 or fewer employees. 
  • Entities with more than 500 employees in certain industries that meet SBA’s alternative size standard or SBA’s size standards for those industries can also apply.
  • Including: Sole proprietors, independent contractors, eligible self-employed individuals, and not-for-profits, including churches.

Full Forgiveness Terms First Draw:

  • PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement: 
  • Employee and compensation levels are maintained
  • The loan proceeds are spent on payroll costs and other eligible expenses
  • At least 60% of the proceeds are spent on payroll costs.

Reapplying and Loan Increases:

  • Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may: (1) reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or (2) under certain circumstances, request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.

Expands Use of PPP Funds to Include New Expenses:

  • Makes personal protective equipment, operational expenditures, and supplier costs eligible for forgiveness. For example: expenses like cloud computing and computer software are now eligible for forgiveness.
  • Can pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.  

Simplifies Forgiveness for PPP Loans under $150,000:

  • Requires borrowers with loans up to $150,000 to submit a one-page certification with only essential information to their lenders and preserve documentation in case the SBA audits the loan.

Access for All:

  • At least $15 billion is being set aside for First Draw PPP loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income neighborhoods.

Second Round of PPP Loans:

  • Businesses who received original PPP loans are eligible for a second round.  To apply for a second PPP loan, businesses 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 Draw PPP Loan. Second round PPP loans reduces eligible borrower size to 300 employees (last round was 500) and a revenue loss of at least 25%.

SBA is reopening the Paycheck Protection Program (PPP) for Second Draw Loans the Week of January 13, 2021: 

  • To promote access for smaller lenders and their customers, SBA will initially only accept loan applications from community financial institutions starting on January 13, 2021. The PPP will open to all participating lenders shortly thereafter.
  • Funds are expected to go quickly, so take the time now to gather your documents and choose your lender so you can be at the front of the line.

Full Forgiveness Terms:

  • Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
    • Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan 
    • The loan proceeds are spent on payroll costs and other eligible expenses
    • At least 60 percent of the proceeds are spent on payroll costs

Eligibility:

  • 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 
    • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Maximum Loan Amount and Increased Assistance for Accommodation and Food Services Businesses:

  • For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (North American Industry Classification System (“NAICS”) Code 72 entities), the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

Simplifies Forgiveness for PPP loans under $150,000: 

  • Requires borrowers with loans up to $150,000 to submit a one-page certification with only essential information to their lenders and preserve documentation in case the SBA audits the loan.

  • Adds another $20 billion for EIDL Advance Grants
  • Targeted EIDL Advance for Small Business Continuity, Adaptation, and Resiliency.
    • Provides additional targeted funding for eligible entities located in low-income communities through the EIDL Advance program from Section 1110 of the CARES Act.
    • Makes entities in low-income communities that received an EIDL Advance under Section 1110 of the CARES Act eligible to receive an amount equal to the difference of what the entity received under the CARES Act and $10,000.
    • Provides $10,000 grants to eligible applicants in low-income communities that did not secure grants because funding had run out.

  • Reverses IRS ruling to allow tax deductions for PPP forgiven expenses and clarifies that PPP loan forgiveness is not taxable income
  • Clarifies that EIDL Advance Grants are not included in taxable income
  • Extends FFCRA tax credits through March 31, 2021
  • Extends the Employee Retention Tax Credit through July 31, 2021 and expands the credit
     

Like Senator Warner’s Save our Stages Act, the bill creates a $15 billion grant program within SBA to offer grants to eligible live venue operators, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives.
 

The bill extends debt relief from principal and interest for SBA borrowers with traditional loan products (e.g., 7(a), 504, and Microloans) for an additional 3 months.
 

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