SBA Opens New Round of PPP Loans, Including Second Loans

The Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury, recently announced that the loan program under the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. 


To promote access to capital, initially only community financial institutions will be able to make first draw PPP loans, starting on Monday, January 11, and second draw PPP loans, starting on Wednesday, January 13.  It is expected that the PPP loans will be open to all participating lenders shortly thereafter. 


This new round of PPP loans continues to prioritize millions of Americans employed by small businesses, including churches, by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a second draw PPP loan. 


Under the new PPP program, there are several changes that borrowers should be aware of before seeking a loan:

  • PPP 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 may cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;

  • PPP now provides greater flexibility for seasonal employees; 

  • Certain existing PPP borrowers can request to modify their first draw PPP loan amount; and

  • Certain existing PPP borrowers are now eligible to apply for a second draw PPP loan. 


Under the new guidelines, a borrower is generally eligible for a second draw PPP loan if the borrow meets the following criteria: 

  • Borrower previously received a first draw PPP loan and will or has used the full amount for authorized uses; 

  • Borrower has no more than 300 employees (for first loans you can have up to 500 employees); and 

  • Borrower can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. 


Therefore, while churches can apply for a second round of a PPP loan, limited to a loan of $2,000,000, there must be more “economic impact” shown to apply for the second loan than was required for the first loan. For example, a church’s gross receipts for the second quarter (April, May, and June) of 2020 must have been at least 25% below the gross receipts from the second quarter of 2019. A church can use any comparable quarters from 2019 and 2020.

Additional guidance is being issued by the Small Business Administration almost daily. As more relevant information is provided by the SBA, the website will be updated.