The PPP is back online today – Here’s what you need to know

top line

The popular Paycheck Protection Program (PPP), which provides forgivable credit to small businesses to keep them afloat during the pandemic, will reopen today with some changes if the federal government tries better target the money to the underserved, smaller businesses that need it most.

Important facts

The PPP was boosted again by the $900 billion stimulus package President Trump signed into law just after Christmas.

The Small Business Administration will limit lending to community-based lenders such as CDFIs, who make loans to first-time borrowers, on Monday and Tuesday, the first two days of the program.

This limitation follows criticism that companies with strong banking relationships and more resources had easier access to money in the first round of the program than their smaller, less resource-rich competitors.

On Wednesday, the program will open to second-borrowers who can demonstrate losses of at least 25% between 2019 and 2020 and have 300 employees or fewer.

The SBA said larger lenders can begin lending under the updated program “shortly” after Wednesday, Jan. 13, but didn’t give an exact date.

This new round of PPP runs until March 31, 2021.

Big number

$284 billion. That’s how much money the new stimulus law provides for the current tranche of the PPP.

Crucial quote

“This updated guidance strengthens the PPP’s targeted assistance to small businesses hardest hit by COVID-19,” Treasury Secretary Steven Mnuchin said in a press release last week. “We are committed to expediting this round of PPPs to continue to support American small businesses and their workers.”

key background

The PPP was created in March by the historic CARES Act, which initially provided $350 billion in forgivable loans that small businesses could use to meet payroll and overhead costs during the pandemic. After an overwhelming flood of applications and a chaotic introductory phase, that $350 billion was gone in just two weeks. The program has been heavily criticized after it was revealed that dozens of public companies had received multimillion-dollar loans, while smaller, unbanked companies were completely barred. In April, Congress passed legislation adding another $310 billion to the PPP, and the program ended in August with $135 billion in its coffers. According to the SBA, the PPP has supported more than 51 million jobs with 5.2 million loans worth $525 billion.

Further reading

Finally: Trump signs $900 billion relief bill, clearing way for $600 stimulus checks and preventing shutdown (Forbes)

Here’s how to get small business credit from the new $284 billion PPP program (Washington Post)

Good news for minority-owned businesses: community banks get the crack in new round of PPP loans (Forbes)

The second round of the paycheck protection program is “more frustrating” than the first time (Forbes)

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