Alabama business owners will soon have access to a fresh round of pandemic relief funding as the Paycheck Protection Program begins reopening for applications this week.
The federal government made some modifications to the program and replenished the program’s coffers in December. The Small Business Administration (SBA) announced fresh guidelines for the updated program in recent days.
Alabama Governor Kay Ivey called the SBA’s update on the program “welcome news.”
“I encourage small business owners across our state to take advantage of these available funds. Any support that we can provide our small businesses in this challenging season is critical to our overall recovery,” Ivey said in a statement.
Community Development Financial Institutions (CDFIs) or Minority Depository Institutions (MDIs) will be the first with access to the new PPP funds.
Those seeking a PPP loan have been split into two categories: “first draw” and “second draw” borrowers.
A first draw borrower has not previously received a PPP loan, and they must prove their company was operating prior to February 15, 2020.
Second draw borrowers got a PPP loan during the program’s first run in 2020. To be eligible for the second loan, the company has to have no more than 300 employees and must “demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020,” according to the SBA.
First draw borrowers could begin applying for loans at CDFIs and MDIs on Monday, and second draw borrowers can begin their applications on Wednesday.
The SBA says the PPP will open soon to all participating lenders, but the organization has not yet announced the date on which that will occur.
Key updates to the PPP from how it operated in 2020 include, per the SBA:
- 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 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, destination 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; and
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
The Yellowhammer State has 27 CDFIs, a list of them provided by the governor’s office can be accessed here.
The PPP is set to close to new applicants on March 31, 2021.