As part of the coronavirus relief package passed by Congress at the end of 2020, the Small Business Administration (SBA) has reopened the PPP to help fund small businesses and sole proprietors or independent contractors who were in operation on February 15, 2020 and were adversely affected by the pandemic. This revised program also includes a “Second Draw” PPP loan for small businesses who have exhausted their initial PPP funding.
This new PPP round offers qualified businesses with potentially forgivable loans up to $2 million at a 1% interest rate, based on average monthly payroll costs (or for sole proprietors, your average net revenue)—from an equivalent period of 2.5 months (or 3.5 months if in the food service or accommodation industry). Existing PPP borrowers may be eligible for additional funding based on additional criteria (see below).
As long as you use the proceeds of the loan under the rules, these loans are 100% forgivable, meaning they can turn into a grant.