Paycheck Protection Program Updates
The U.S. Small Business Administration (SBA) recently announced updates to the Paycheck Protection Program (PPP), which offers loans designed to provide economic relief to small businesses nationwide impacted by COVID-19. $325 billion has been earmarked for small businesses, nonprofits, and venues, and the deadline for the SBA to authorize PPP loans has been extended to March 31, 2021. Full details on the PPP updates have been published on the SBA's website—what follows is an overview of some of the major points:
"Second Draw" Loans- "Second Draw" loans are new loans to small businesses, nonprofits, sole proprietors, and independent contractors having exhausted their initial PPP loans
- Eligibility: (1) No more than 300 employees and (2) Demonstrate at least a 25% reduction in gross revenue between comparable quarters in 2019 and 2020
- Loan Amount: Based on average monthly payroll costs multiplied by 2.5 (or by 3.5 in the accommodation and food service industries), not to exceed $2 million
- Loan Forgiveness: Borrowers may receive full loan forgiveness if they spend at least 60% of their PPP second draw loan on payroll costs over a time period of their choosing between 8-24 weeks. Other conditions for loan forgiveness are also available.
- Churches and religious organizations are eligible for aid.
- First-Time Borrowers
- $35 billion is set aside specifically for borrowers who did not receive PPP loans during the initial round of loans.
- First-time borrowers are encouraged to contact their bank or lender immediately to inquire about program and application requirements. Businesses that don't have an existing bank or lender can use SBA's online Lender Match tool to find SBA-approved CDFIs and small lenders.
- Certain 501(c)(6) nonprofits and local news media organizations are newly eligible for PPP.
- Community financial institutions (CDFIs, CDCs, Microlenders, etc.) will be able to begin making First Draw loans on January 11, 2021 and Second Draw loans on January 13, 2021. Eligible lenders with $1 billion or less in assets will be able to accept First and Second Draw applications on January 15, 2021. All other eligible lenders will be able to accept applications on January 19, 2021.
- Interested applicants are encouraged to contact their bank or lender to begin preparing to apply.
- View Utah-based banks and credit unions participating in PPP.
- SBA offers an online Lender Match tool to connect small businesses with SBA-approved CDFIs and small lenders. Please note: Lender Match is NOT a loan application and does not guarantee eligibility for loan programs; it only helps businesses find lenders in their area.
Economic Injury Disaster Loan (EIDL) Updates
The deadline to apply for the SBA COVID-19 EIDL program was recently extended to
December 31, 2021 (pending the availability of funds). The EIDL is a low-interest loan available to small businesses, nonprofit organizations of any size, or agricultural businesses with 500 or fewer employees having suffered substantial economic injury due to COVID-19. The COVID-19 EIDL can be used for working capital and normal operating expenses. Interested applicants are encouraged to
apply online through the SBA.
- Interest rates can be as low as: (1) 3.75% for businesses and (2) 2.75% for private nonprofits
- Loans have a 30-year maturity and an automatic deferment of one year before monthly payments begin.
- Loan amounts and terms are set by the SBA and are based on each applicant's financial condition.
- Additional EIDL information can be found here.
For the most direct updates from the SBA, subscribe to the SBA Utah District Office newsletter
here, and follow the
SBA on Twitter (@SBA-Utah). You may also contact the Utah District Office at (801) 524-3209 or by email at
utahgeneral@sba.gov..
Additional Business Resources
If you have any questions or need support, the Ogden City Business Development team is here to assist you. Please feel free to contact Ogden City Business Development at (801) 629-8910 or by
email.