Small businesses impacted by the COVID-19 pandemic have another opportunity to seek funds from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) beginning January 11th, 2021.  The recent passage of the Consolidated Appropriations Act of 2021 re-opens the program and modifies certain terms, now making it possible for some prior PPP borrowers to receive a second loan under specified circumstances. The following summary covers major points and recent updates to the program.

What is the Paycheck Protection Program?

The Paycheck Protection Program is a loan program that originated from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Loans distributed under the PPP are forgivable if 60% of the loan is used towards payroll expenses (salary, wage, benefits, etc.) and the remaining 40% is used on mortgage interested, rent, and/or utilities.  Partial loan forgiveness is granted if a borrower is unable to meet the thresholds for full forgiveness.  Any unforgiven amount is to be repaid within either two years or five years (if loan distributed after June 5th, 2020) with an interest rate of 1%.

Paycheck Protection Program loans and forgiveness are administered by approved lenders but governed by the SBA.  For the SBA’s lender search tool, CLICK HERE.

For more information on the Paycheck Protection Program from the SBA, CLICK HERE.

Program Modifications from the Consolidated Appropriations Act of 2021

  • Maximum amount of loans is now limited to $2 Million, down from the maximum of $10 Million before the program closed in August.
  • Forgivable costs now include cloud computing software, essential expenditures to suppliers, and the cost of worker protections and facility modifications necessary to comply with COVID-19 safety guidelines.
  • Business expenses paid with PPP loans (including forgiven PPP loans) are tax-deductible, which reverses prior guidance from the Treasury.
  • PPP borrowers can set their loan’s covered period to be any length between 8 and 24 weeks, instead of choosing between either 8 or 24 weeks.
  • Economic Injury Disaster Loans (EIDL) will no longer reduce the amount of forgiveness if a borrower receives both an EIDL and PPP loan.
  • Simplified forgiveness applications for loans (first or second draw) under $150,000 will be made available by the SBA.  Currently, the SBA directs borrowers to contact their lender for the most appropriate forgiveness application form.


First Time PPP Borrowers

Originally closed to new borrowers in August, the SBA has been directed to reopen the PPP and has been allocated another $284 billion to disperse under the program.  To be eligible for an initial or ‘first draw’ loan, a borrower must meet the following qualifications:

  • Employ fewer than 500 employees – this includes businesses such as sole proprietorships, independent contractors and the self-employed, private non-profits and certain veterans’ organizations.
  • Be in business as of February 15th, 2020 and need a loan to support ongoing operations due to the current economic uncertainty. Those applying for loans of $2 million or more must submit a loan necessity questionnaire (CLICK HERE) from the SBA with their application to their lender.

The Paycheck Protection Program re-opens January 11th, 2021. An updated application for ‘first draw’ PPP loans is available (CLICK HERE).

Second Time PPP Borrowers

Borrowers who have already received an initial PPP loan may apply for a second forgivable loan if they meet the following qualifications:

  • Employ fewer than 300 employees
  • Demonstrate at least a 25% reduction in gross receipts between comparable quarters (2019 vs 2020)
  • Initial PPP funds have been spent
    • It is important to note that the first PPP loan does not need to be forgiven if applying for a second.

‘Second draw’ applicants can apply for new PPP loans beginning January 13th, 2021, using the application available (CLICK HERE).

The application window for ‘first draw’ and ‘second draw’ PPP loans will close March 31st, 2021.

The COVID-19 public health emergency (PHE) declaration, set to expire January 21st, has been extended into April of 2021.

As always, ADVOCATE will continue to keep you informed on the issues impacting medical groups as they develop.


Kayley Jaquet

Manager, Regulatory Affairs