Re-Opened Paycheck Protection Program to Benefit Nonprofits
January 11, 2021 — The federal Paycheck Protection Program, which provides financing that can be turned into a grant to help keep workers employed during the coronavirus crisis, was due to re-open this week for new nonprofits and certain charities that got funding through the first iteration of the program last year.
The new round of so-called PPP loans continues to prioritize millions of Americans employed by nonprofits by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan, according to the U.S. Small Business Administration (SBA).
Key PPP updates include the following:
Nonprofits can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs.
PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
PPP eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations.
The PPP provides greater flexibility for seasonal employees.
Certain existing charities can request to modify their First Draw PPP Loan amount.
Certain existing charities are now eligible to apply for a Second Draw PPP Loan.
Nonprofits are generally eligible for a Second Draw PPP Loan if the charity:
Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses.
Has no more than 300 employees.
Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said SBA Administrator Jovita Carranza.
She said the new guidance “builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”
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