New Small Business Administration PPP Rollout: UPDATE 4

SBA is making $284 billion available for new (first draw) and certain existing (second draw) Paycheck Protection Program (PPP) loans.

Under the new PPP loan program:

  • a second draw PPP loan applicant must enter its first draw PPP loan number;
  • maximum second draw PPP loan amounts are $2 million per loan and $4 million per corporation;
  • borrowers can adopt covered periods of between eight and 24 weeks;
  • in addition to previously allowed expenses, new loan proceeds may be used for certain operational, property damage, supplier and worker protection expenditures;
  • potential PPP borrowers now include 501(c)(6) nonprofits; and
  • certain first draw PPP loan borrowers are eligible to modify their loan amounts.

A PPP borrower is generally eligible to apply for a second draw PPP loan if it:

  • has received a first draw PPP loan and fully uses the proceeds for authorized expenses only;
  • has no more than 300 employees;
  • had at least a 25% reduction in gross receipts between comparable calendar quarters in 2019 and 2020; and
  • can certify that the loan is “necessary to support ongoing business operations in light of current economic conditions.” This parallels the certification dealerships made when applying for PPP loans in 2020.

To date, the SBA has issued the following new PPP loan guidance.

Save-the-Date: On Monday, Feb. 8, at 1pm Eastern Time, NADA will host a webinar on the eligibility criteria for the new PPP, the revised Employee Retention Tax Credit, the deductibility of expenses paid with PPP loan proceeds, and the process and key factors involved with applying for and obtaining PPP loan forgiveness; registration details will be sent to all dealers next week. Reminder: Dealers interested in applying for a new PPP loan should consult legal counsel, accountants and prospective lenders.