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The Paycheck Protection Program has opened back up to all eligible small businesses as of January 19th and offers both first and second draw loans. First Draw PPP Loans are for those borrowers who have not received a PPP loan before August 8, 2020, and generally have 500 employees or less. The business must have been in operation on February 15, 2020 and must certify current economic uncertainty makes this loan request necessary.
Second Draw PPP Loans are for eligible small businesses with 300 employees or less, that previously received a First Draw PPP Loan and will use or have used the full amount only for authorized uses, and that can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The maximum amount of a Second Draw PPP loan is $2 million.
For either loan, at least 60% of the loan must be spent on payroll and the rest spent on other eligible expenses. If the loan is not forgiven, these loans would have an interest rate of 1% and a term of five years. Loan payments are deferred for 10 months after the covered period ends or when you receive a forgiveness verdict from the SBA, whichever comes first.
As always, if you need help navigating these constantly shifting waters please reach out to your friendly neighborhood HR Partners at Axios HR.
January 25, 2021
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