How to get a small business loan from the new $284 billion PPP program

WASHINGTON - The Small Business Administration is trying to take a more deliberate and targeted approach to distributing another $284 billion in subsidized Paycheck Protection Program small business loans compared to past iterations of the program, officials said in a call with reporters Friday.

The SBA is also reacting to criticism that larger, well-banked borrowers had a leg up against their less-established peers when the first loans rolled out in April.

The new rules are intended to “ensure this round of funding goes to those who need it most,” a senior administration official said in a call with reporters Friday. The Treasury Department asked reporters not to identify the officials as a condition for participating in the call.

The new loans should provide much-needed relief to a still-struggling business community; they come as the U.S. economy shed 140,000 jobs in recent months as the coronavirus pandemic reached its worst point yet. Congress recently authorized another $284 billion for PPP, bringing the program’s total funding value to $806 billion.

“This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19,” Treasury Secretary Steven Mnuchin said in a news release. “We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”

SBA administrator Jovita Carranza said in the same news release that the new rules “build on the success of the [PPP] program and adapt to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”

The rules include a number of restrictions passed down from Congress and some others devised by the SBA and Treasury Department.


So-called community financial institutions tasked with serving low-income, minority-owned and other disadvantaged businesses will get a first crack at the funds Monday, with larger banks shut out until an undetermined later date.

A new size standard and means testing will block many of the larger, wealthier businesses that received help last year. And a new automated review system will now kick in before borrowers can access their funds.

There are still significant open questions about how the program will be administered. As of Friday morning, just a few days before the first loans were supposed to be issued from the new fund, the SBA and Treasury Department had yet to release a required application form. Some lenders expressed confusion about new automated systems used to approve and disburse loans.

Below are answers to some key questions facing business owners and those they employ. (This FAQ will be updated as new information becomes available.)

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My company already received a PPP loan. Can it get another one?

The SBA is allowing some first-time recipients to get a second PPP loan, but not all of them.

To be eligible for a “second-draw” PPP loan a business can’t have more than 300 employees. Businesses receiving second-draw loans must have experienced a 25% or more reduction in revenue in 2020 compared to 2019. (This calculation does not include loan forgiveness.)

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Which businesses are eligible?

Those eligible to receive PPP funding for the first time include businesses that meet established SBA size standards, independent contractors, 501(c)(3) nonprofits. The SBA also made some new business categories eligible which had previously been shut out, including: 501(c)(6) organizations such as local chambers of commerce; housing cooperatives; and direct marketing organizations. There is a more stringent set of requirements for second-draw loans.

Detailed eligibility requirements can be found starting on page 13 of this document for first-draw loans, and on page 5 of this document for second-draw loans.

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What period do the loans cover?

PPP loans can cover any length between 8 and 24 weeks depending on what best meets the business’ needs, according to SBA informational materials. The interest rate is still 1%.

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What kinds of expenses can a PPP loan cover under the new rules?


While the program was initially limited to payroll expenses, the new PPP funding can also be spent on a range of new expenses including operations expenditures, property damage costs, supplier costs, and worker protection expenditures.

The rules for how PPP funding can be spent are included on page 48 of this document.

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How soon can I get a PPP loan?

Community finance institutions can start issuing PPP loans to first-time recipients on Monday, Jan. 11, a senior administration official said Friday morning. Those same lenders will be able to offer new loans to companies that previously received PPP loans starting two days later on Wednesday, Jan. 13.

Larger banks will be able to start distributing PPP loans at an undetermined later date.

An SBA official speaking on the condition of anonymity said in a Friday media call that loans would not be issued instantaneously because the government is putting in place a new automated evaluation system designed to manage borrowers’ identities and verify business data. The agency has released little information about what these new checks would entail or how long they will take.

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How do I apply on behalf of small business?

Paycheck Protection Program loans are accepted, processed and disbursed by a network of SBA-approved lenders. They are listed by state here and through the SBA’s online lender match tool here.

If you are a first-time applicant, you can fill out a copy of the SBA’s June 24, 2020 application form. The SBA is preparing another application form for second-draw borrowers but it hasn’t been released yet. This document will be updated when the application form is made available.

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Is the funding likely to run out?

The first round of PPP funding, which started in April 2020, ran out in a matter of weeks as a panicked business community accessed quickly applied for loans. The second round, by contrast, finished the year with more than $100 billion left over.

SBA and Treasury Department officials say they believe the current $284 billion round of funding will be more than enough.

“We don’t anticipate the money running out,” said a senior administration official involved in implementing the PPP program.