Small Business Second PPP Loans & Grants

Chicago Small Business Lawyer

Small Business Pandemic Survival Information

The $900 billion pandemic relief package included relief for Small Businesses.  The updated programs are intended to make it easier for small business owners to apply and gain funds.

The Small Business Administration (“SBA”) approved $5 billion in new Paycheck Protection Program (“PPP”) loans on January 19 and expanded the network of lenders who can make the loans.  At least $25 billion is being set aside for Second 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.  More info is available on the SBA Website here.

The new PPP loans are a little more restrictive for businesses seeking a second PPP loan:

  • At least $25 billion of funds under the Act are set aside for second draw PPP loans to eligible borrowers in low- or moderate-income neighborhoods with a maximum of 10 employees or for loans up to $250,000.
  • There are caps on the number of employees, the amounts are lower and to qualify applicants must show that they lost 25% or more of their revenue during at least one quarter in 2020.
  • Second draw loans are available until March 31, 2021 for any business concern.
  • Applicants must have used or will use the full amount of the first PPP loan before the second loan is disbursed.
  • A business can only get one second draw loan.
  • The maximum amount of a second draw PPP loan is 2.5x the average total monthly payment for payroll costs incurred or paid by the applicant during (i) the one-year period before the date on which the loan is made or (ii) the 2019 calendar year.
  • The maximum loan amount for seasonal employers is 2.5x the average total monthly payment for payroll costs incurred or paid by the applicant during any 12-week period between February 15, 2019 and February 15, 2020.

The SBA has created Economic Injury Disaster Loans which are planned to help cover working capital and operating expenses to qualified business.  These loans will available throughout 2021.

A related grant program is available to businesses in low-income communities and have lost at least 30% of their revenue over an eight-week period during the pandemic.  The SBA is supposedly reaching out to businesses that qualify in the coming weeks.

And, more relief may be coming…. President Biden’s proposed $1.9 trillion relief plan includes $15 billion in small-business grants and a $35 billion investment in state, local, tribal and nonprofit small-business financing programs providing low-interest loans and venture capital.  We shall see how that proposal fares in Congress.

For more info on the programs check out the SBA website.