The Small Business Administration (SBA) has announced that it has so far approved some 60,000 Paycheck Protection Program (PPP) loans in its first week since the second round of PPP2 relief was made available to small businesses. During the period from January 11 to January 17, 2021, over $5 billion in loans were provided through some 3,000 lenders.
During the same period, PPP was able to provide access to community financial institutions that specialize in serving underserved communities. This includes minority-, women- and veteran-owned small businesses by smaller lenders.
More Than 60,000 PPP2 Loans Approved
Through the Consolidated Appropriations Act (CAA) signed into law in December 2020 some $284 billion has been earmarked for small businesses relief through the Paycheck Protection Program (PPP2). Certain existing PPP borrowers can also apply for a Second draw PPP Loan. The first two PPP rounds open between March and August 2020. It helped 5.2 million small businesses keep 51 million American workers employed.
What PPP2 offers:
- The first draw PPP2 loans are for eligible small businesses who didn’t get a PPP loan before August 8, 2020.
- The second draw of PPP2 loans are for eligible small businesses with 300 employees or less and that previously received a First Draw PPP loan.
- Under PPP2 borrowers don’t need collateral or personal guarantees. The federal government provides a 100% guarantee for the loans.
- PPP2 comes with an interest rate of 1%, calculated on a non-compounding, non-adjustable basis, and has a five-year loan term.
- Loan payments will be deferred for borrowers who apply for loan forgiveness. This is until the SBA remits the borrower’s loan forgiveness amount to the borrower’s lender.
How PPP2 Plays Out
Under PPP2 four general areas are part of the coverage for businesses. They are operation expenditures, property damage costs, supplier costs and worker protection expenditures. Upon submission of an application by a borrower for either a first draw or second draw under PPP2, the application will now go through a series of automated checks before a borrower gets a loan number. The maximum amount of a Second Draw PPP loan is $2 million. The first and second draw PPP2 loans are open until March 31, 2021.