Paycheck Protection Program application start date: What to know about the new small-business loans

The Small Business Administration has announced that the federal Paycheck Protection Program will reopen beginning next week, offering a much-needed financial lifeline to small businesses that have been suffering from the impacts of the coronavirus pandemic for almost a year.

Applications will initially be limited to smaller, community-based lenders, a response to widespread criticism that larger banks and companies with existing access to capital were favored during the first round of loans that went out last year. Recent data on those loans has also found that minority-owned businesses were the last to receive assistance.

This time around, the SBA pledges a more equitable process. In addition to placing smaller lenders at the front of the line, it released new guidance on accessing capital specifically aimed at underrepresented business owners, including women, people of color, and veterans.

Smaller businesses that did not receive a PPP loan the first time around can begin to apply on Monday, January 11. Those that did receive one of the original loans can apply for a second PPP loan beginning on Wednesday, January 13, provided they meet eligibility requirements. For larger applicants, the program will open “shortly thereafter,” the SBA said Friday in a joint announcement with the U.S. Treasury Department.

Authorized as part of the coronavirus stimulus package passed in December, the PPP has been extensively revised from its original form, whose focus on payroll costs was seen as too restrictive by many business owners. While job retention is still the goal, the new loans will come with more flexibility, the SBA says. Among the program’s new details:

“Borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs”
“PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures”
“The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations”
“The PPP provides greater flexibility for seasonal employees”
“Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount”
“Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.”