The Paycheck Protection Program, a vital lifeline that helped keep small businesses afloat during the coronavirus pandemic, will reopen to applicants on Monday, the Trump administration announced Friday.
Continue Reading Below
The rescue fund — which provides forgivable loans to businesses if they maintain their payroll — will initially only be available to first-time borrowers, with second-time applicants eligible to apply on Wednesday, according to new guidance from the Small Business Administration and the Treasury Department.
The federal government will also give priority to minority-owned businesses in the program's first two days by only accepting loan applications from certain lenders that focus on underserved communities.
Congress established the $670 billion rescue fund earlier this year with the passage of the CARES Act at the end of March. Lawmakers authorized another $284 billion last month to provide a second round of forgivable loans to small businesses as part of its more comprehensive $900 billion COVID relief plan. At least $40 billion has been set aside for businesses with 10 or fewer employees and for loans under $250,000 in low-income areas.
Only businesses with 300 employees or fewer are eligible to receive a second loan, which will be capped at $2 million. Borrowers also need to prove that they saw a 25% reduction in gross receipts during a quarter in 2020 compared with the same quarter in 2019.
During the first round, businesses with fewer than 500 employees could receive as much as $10 million.
At the program's onset, it was heavily criticized for granting aid to publicly traded companies that had other avenues for relief – even as small businesses languished. The SBA and Treasury Department, which jointly administered the program, scrambled to close the loopholes that allowed multimillion-dollar companies to tap the fund, including pledging to audit any loan worth more than $2 million.
Over the course of roughly four months, the PPP distributed about $525 billion in forgivable loans to 5.2 million companies, saving an estimated 50 million jobs, according to the SBA. The program closed to new applicants at the end of July with roughly $38 billion remaining in the fund.