The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act), passed in late December, includes more than $284 billion for another round of the Paycheck Protection Program (PPP) loans. Recent action by President Biden has made the program more accessible to organizations.

UPDATE: Special application window for organizations with fewer than 20 employees (February 24th through March 10th)

During this time period, lenders are required to only process loan applications from small businesses and nonprofits. The purpose is to provide more equitable relief by “targeting the PPP to the smallest businesses (and nonprofits!) and those that have been left behind in previous relief efforts,” and to ensure that lenders give smaller employers the attention they need to work their way through the application process.

If you think your nonprofit may be eligible for an initial PPP loan or a second draw loan – and your organization has fewer than 20 employees – NOW is the best time to contact a lender (find eligible lenders) and find out how much relief may be available to you. 

Paycheck Protection Program 2.0: Eligibility and Application (Webinar)

Watch the recording on Youtube
Download the slides (PDF)

Speakers:
Julie Clowes, District Director, Small Business Administration, San Francisco District Office (SFDO)
Lucy Salcido Carter, Public Policy Director, CalNonprofits
Jan Masaoka, CEO, CalNonprofits

PPP 2.0 Overview

The PPP 2.0 loan application process runs from January 11 through March 31, 2021. Similar to the PPP in 2020, PPP 2.0 will require borrowers to work through a lending partner approved by the Small Business Administration, and loans are forgivable if borrowers meet the loan forgiveness requirements. For now, only CDFI's are able to accept applications, but small lenders can process applications starting on 1/15/21 and all SBA-approved lenders on 1/19/21. But, there are also a number of new provisions and requirements in PPP 2.0.

The PPP 2.0 includes two avenues for accessing funds: First Draw Loans and Second Draw Loans.

 First Draw Loans:

• Open to organizations that did not receive a PPP loan in 2020, or that did not receive forgiveness by 12/27/20 for a 2020 PPP loan, and either returned or did not accept a portion of that loan
• Applications are now accepted through any SBA-approved financial institutions (click here to find approved lenders)
• Small businesses and nonprofits with 500 or fewer employees are eligible
• Also: tribes, self-employed individuals, and independent contractors

Second Draw Loans:

• Open to organizations that received a PPP loan in 2020 and
  • have used or will use the full loan amount for authorized expenses
  • have 300 or fewer employees
  • can show a 25% or more decrease in gross revenue between comparable quarters in 2019 and 2020
• Applications are now accepted through any SBA-approved financial institutions (click here to find approved lenders)
• For most borrowers, the maximum Second Draw loan amount is 2.5 times the average monthly payroll costs for either 2019 or 2020.

How do I apply?
You must apply through an SBA-approved financial institution, and each of them may have a different process. You can use this website to find a lender to work with: https://www.sba.gov/funding-programs/loans/lender-match.

Eligibility 

The following entities affected by Coronavirus (COVID-19) may be eligible:

• Sole proprietors, independent contractors, and self-employed persons
• Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
• Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
  • 500 employees, or
  • That meets the SBA industry size standard if more than 500
• Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location

Forgiveness and Eligible Expenses

Both types of loans are forgivable if, within the 8- to 24-week period after the loan is received, the organization:

• maintains employee and compensation levels
• spends the funds on payroll (at least 60% of total) and other eligible expenses

Funds from both loan types can be spent on:

• payroll costs, including benefits
• mortgage interest, rent, utilities
• worker protection costs related to COVID-19
• certain other operations expenses

The new PPP 2.0 includes special set-aside funds (First Draw more than $15 billion, Second Draw more than $25 billion) for borrowers with 10 or fewer employees or for loans $250,000 or less for borrowers in low- or moderate-income neighborhoods.

Arts Organizations

Nonprofits that received a PPP in 2020 can apply for the new federal Shuttered Venue Operators Grant Program (aka Save Our Stages), if they are eligible, but cannot apply for both a Second Draw PPP loan and a Shuttered Venue Operators grant.