You could get a second PPP loan under the next stimulus


A new bill introduced this week would allow eligible small businesses to apply for a second paycheck protection program (P3) loan. The legislation, which is part of a larger relief plan backed by Senate Republicans, known as Health, Economic Aid, Liability Protection and Schools Act (HEALS Act), would offer a second forgivable loan to businesses that can show a reduction of at least 50% of their gross revenues during the pandemic.

Presented by les Sens. Marco Rubio (R-FL) and Susan Collins (R-ME), the Small Business Continuous Recovery and Paycheck Protection Program Act seeks to reform parts of the original PPP law that small businesses criticized, including the types of expenses eligible for the rebate, while providing additional financial assistance to small businesses that still struggle to stay afloat, at the both with short-term PPP loans and a new long-term contract. term payback loan program.

“The PPP and other small business provisions under the CARES Act have been a historic lifeline for millions of small businesses and tens of millions of American workers,” Rubio said in a press release. “Now Congress must take action to help industries and businesses, especially small minority-owned businesses and those in low-income communities, which have been hit hard by the COVID-19 pandemic. “

What’s in the latest PPP loan legislation

The bill includes four areas of intervention:

PPP second draw loans

This would provide $ 190 billion in financing for PPP loans and PPP second-draw loans, the latter specifically for businesses that meet the US Small Business Administration. income size standard, have no more than 300 employees and can show a reduction of at least 50% of their gross income. The law also prohibits companies from receiving a second loan if it increases their combined PPP loan amount above $ 10 million.

PPP improvements

This would include expanding reimbursable expenses to include:

  • Supplier costs covered, such as food orders for a restaurant or raw materials for a manufacturer.
  • Worker protection expenses, including adapting the business to current needs such as installing partitions or a new air filtration system.
  • Operating expenses, such as payments for business software or cloud computing services used for business operations, sales and billing functions, accounting, or tracking supplies, inventory, records, and expenses.
  • Certain property damage, including damage, loss due to looting and / or vandalism that occurred as a result of the 2020 riots that was not covered by insurance or otherwise compensated.

Other changes to the original PPP law include the ability for borrowers to choose their preferred eight-week period to use their PPP funds and the simplification of the forgiveness application process for loans of $ 150,000 or less.

Investment Facility for Small Business Growth and National Production

This part of the legislation sets aside $ 10 billion for SBA-registered Small Business Investment Corporations (SBICs) – private companies that provide financing to small businesses – that invest in small businesses in low-income communities, manufacturers of national supply chains and companies with significant COVID. -19 related loss of income.

Guidelines for SBA Loans to Recovery Businesses

This would allocate $ 100 billion in low-cost, long-term loans to eligible “recovery sectors” of the economy, which are defined as including eligible rural, low-income and seasonal businesses. Authorized uses of loans include working capital, the acquisition of fixed assets and the refinancing of existing debt. The loans would be for a maximum term of 20 years at an interest rate of 1%.

How this bill could help smaller businesses

Supporters of the bill say it is the missing piece that smaller and more disadvantaged businesses were missing in the original Coronavirus Aid, Relief and Economic Security (CARES) law.

“The separate, long-term, low-interest loan program set out in the package could very well be the real Main Street lending program that the Federal Reserve seems to have missed,” Karen Kerrigan, President and CEO. Small Business leadership & Entrepreneurship Council said in a press release. “This program will help a wide range of small businesses in low-income areas by providing favorable terms and will allow a wide use of loan funds, including working capital and refinancing of existing debt.”

Smaller businesses have been hit particularly hard by the pandemic compared to their larger counterparts. According to a May 2020 report from the Small Business Association’s Office of Advocacy, employers with 20 to 49 employees suffered the largest percentage of job losses, with employment declining by 21.5%. In comparison, businesses with 1,000 or more employees saw a 13.3% decline.

Some say that while the Small Business Continuous Recovery and Paycheck Protection Program Act is a step in the right direction, it still doesn’t do enough to help those who need it most, especially those who need it most. minority-owned businesses as well as those with relatively limited financial resources. resources disproportionately affected by the pandemic. A June 2020 study by management consulting firm McKinsey & Co. found that minority-owned businesses and business owners with only a high school diploma or less were among the most popular industries. more vulnerable.

“As Bill Rubio-Collins begins to take a longer-term view of the economic impacts small businesses are grappling with, their PPP expansion and new program is not the right way to get small business support. underbanked, “Amanda Ballantyne, executive director of The Main Street Alliance, a small business advocacy group, wrote in an email to Forbes Advisor:” Further expansion of the Employee retention tax credit (ERTC), and facilitating access to ERTC is a better and fairer way to achieve the twin goals of maintaining employment and supporting small businesses.

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