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SBA Reopens Portal for PPP Round Two Applications; Quick Action Recommended

January 19, 2021

The SBA, in consultation with the Department of Treasury, has announced that it is reopening its portal for first draw and second draw PPP applications to all eligible PPP lenders today, January 19, 2021. The portal had previously been reopened to community financial institutions for first draw applications on Jan. 11 and second draw applications on Jan. 13 and to small eligible lenders (those will less than $1 billion in assets) on Jan. 15.

The deadline for submitting applications is March 31, 2021. Eligible borrowers desiring to apply for a first draw PPP loan (or increase in a first draw PPP loan) or second draw PPP loan should do so as soon as practicable in view of the funding available under the Economic Aid Act and last year's experience with applications for first round PPP loans.

A copy of the application for a first draw PPP loan may be found here [PPP First Draw Borrower Application Form (sba.gov)] and a copy of the application for a second draw PPP loan may be found here [PPP Second Draw Borrower Application Form (sba.gov)].

BACKGROUND

The Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act (Pub. L. 116-260) (Economic Aid Act) (enacted as part of the 2021 Consolidated Appropriations Act), which became law December 27, 2020, extends the authority of the Small Business Authority (SBA) to guarantee PPP loans through March 31, 2020, and revises certain requirement of the program. The Economic Aid Act authorizes $284 billion in additional funding for the "round two" PPP loan program.

The SBA and the Department of the Treasury have issued two interim final rules (IFRs) with respect to the round two PPP loan program. The first IFR, "Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by the Economic Aid Act"  ("Consolidated First Draw PPP IFR"), incorporates changes to PPP requirements made by the Economic Aid Act and consolidates and restates 19 IFRs issued by the SBA and Department Treasury with respect to the round one PPP loan program. The second IFR, "Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans" ("Second Draw PPP IFR"), implements the "second draw" PPP loans authorized under the Economic Aid Act. The Consolidated First Draw PPP IFR and the Second Draw PPP IFR became effective as of January 12, 2021. The Consolidated First Draw PPP IFR indicates that the SBA intends to issue an additional consolidated IFR covering PPP loan forgiveness and the PPP loan review process.

SUMMARY OF FIRST DRAW PPP LOANS

A first draw PPP loan is available only to first-time eligible borrowers (those not having received a PPP loan in the round one PPP program). The eligibility requirements for a first draw PPP loan are the same as in the round one PPP program in many respects but there are several changes:

SUMMARY OF SECOND DRAW PPP LOANS

A "second draw" PPP loan is available only to eligible borrowers that previously received a first draw PPP loan and have used or will use the full amount of the proceeds (including any increased amount as described above) on or before the expected date of the disbursement of the second draw PPP loan. The principal differences in the eligibility requirements for a second draw PPP loan compared to the requirements for a first draw PPP loan include:

The information in this alert is based on the Economic Aid Act, the Consolidated First Draw PPP IFR, and the Second Draw IFR and is subject to change as additional guidance is issued by the SBA and the Department of Treasury as to PPP loan forgiveness, review of PPP loans and other matters.

Please contact the authors of this alert or your Miller Canfield attorney if you have any questions with regard to your eligibility for a first or second draw PPP loan under the Economic Aid Act or the required applications for the loans.