COVID Financial Relief

Paycheck Protection Program

Colorado SBDC Disaster Relief Efforts Supported By:

Paycheck Protection Program (PPP)

With the new $284 billion Congressional appropriation for small business relief, the federal Paycheck Protection Program (PPP) is now open for new borrowers and certain existing PPP borrowers.

Community financial institutions are currently able to make First Draw PPP Loans and Second Draw PPP Loans on Wednesday, January 13. The PPP program will open to all participating lenders shortly thereafter. Review this list of participating Colorado Community Development Financial Institutions.

In the new rounds of PPP, businesses that use an agent to file their PPP applications will be responsible for covering the corresponding expense for their service. In the 2020 PPP allocations, the lender paid that fee; however, businesses are now responsible for the fee and cannot use PPP funds to reimburse themselves. For PPP applicants that have previously received PPP loans, the financial institution which processed last year’s loan is your best place for you to begin new inquiries.

In preparation, this Prepare for the PPP document outlines the key elements needed to prepare for your PPP application.

Finally, to help guide you through the process, the following links provide detailed information for each corresponding element of the federal stimulus:

Learn More

SBA, in consultation with the U.S. Treasury Department, reopened the Paycheck Protection Program loan portal on Monday, January 11, 2021 at 9 am ET. It will initially accept First Draw PPP loan applications from participating CFIs, which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries and Second Draw PPP Loans on Wednesday, January 13.

To apply, contact your PPP lender and complete the correct form. Review this list of participating Colorado Community Development Financial Institutions.

In the new rounds of PPP, businesses that use an agent to file their PPP applications will be responsible for covering the corresponding expense for their service. In the 2020 PPP allocations, the lender paid that fee; however, businesses are now responsible for the fee and cannot use PPP funds to reimburse themselves. For PPP applicants that have previously received PPP loans, the financial institution which processed last year’s loan is your best place for you to begin new inquiries.

Payments on your PPP loan are not currently due!


We have had a number of businesses contact us recently who have been concerned that their loan documents for the PPP require them to start making payments in the very near future. This is not the case.

The original CARES ACT contained language that made this true and if you received a PPP loan in the beginning of the process your lender would have included language in your loan documents that made this the case. However, the FLEXIBILITY ACT changed the payment schedule and deferred your first payment for a long time. Interest will accrue on any unforgiven portion of your PPP from the date you received a disbursement, but your first payment will not be due until much later in the process. Please note that if you received an EIDL Advance it will not be forgiven and will be treated as a PPP Loan.

We have found that many lenders have not formally notified businesses of this change and we know of no lenders that have taken the step of modifying the language in the PPP loan documents. Regardless, your first payment is not currently due. Here is language from the SBA that was issued in the form of a FAQ in early October.

Question: The Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) extended the deferral period for borrower payments of principal, interest, and fees on all PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). Previously, the deferral period could end after 6 months. Are lenders and borrowers required to modify promissory notes used for PPP loans to reflect the extended deferral period?

Answer: The extension of the deferral period under the Flexibility Act automatically applies to all PPP loans. Lenders are required to give immediate effect to the statutory extension and should notify borrowers of the change to the deferral period. SBA does not require a formal modification to the promissory note. A modification of a promissory note to reflect the required statutory deferral period under the Flexibility Act will have no effect on the SBA’s guarantee of a PPP loan.

Latest Updates

2.23.21

 

Priority window for PPP loans for organizations with fewer than 20 employees opens February 24 and closes March 9

Over 36,000 PPP loans totaling nearly $2.9 billion have already been approved for Colorado small businesses since January 2021. The SBA made recent changes to the Paycheck Protection Program to further promote equitable relief for America’s small businesses.

The SBA announced that it will:

  • Establish a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees starting Wednesday, February 24
  • Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants
  • Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal
  • Eliminate PPP access restrictions on small business owners who have struggled to make federal student loan payments by eliminating federal student loan debt delinquency and default as disqualifiers to participating in the PPP
  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP

The 14-day exclusivity period will start on Wednesday, February 24, 2021 at 9 am and closes March 9, 2021. The other four changes will be implemented by the first week of March.

 

Borrowers can apply for the Paycheck Protection Program by downloading the First Draw PPP loan application or Second Draw PPP loan application and working with a participating PPP lender through the SBA Lender Match tool.

Read SBA’s full press release

 

Need Help? 

SBDC is here to help you, whether you need help deciding if additional funding is right for your business, help applying, or general business consulting.  Sign up for free, one-on-one confidential consulting today