A Second Round of PPP Loans Is Available: Here’s How to Get One

A second stimulus bill that includes $285 billion in funding allocated for the Paycheck Protection Program (PPP), has now been passed by Congress and officially signed into law by the President. The bill, known as the “Consolidated Appropriations Act, 2021” includes changes to PPP loan eligibility and forgiveness.

Here are answers to some of the most common questions we’ve been getting from small business owners:

Who Can Apply for A PPP Loan?

PPP loans will be available to first- and second-time borrowers who meet the eligibility requirements set forth in the bill. Small businesses, non-profits, and independent contractors are all eligible to apply. In addition, for the first time since the start of the program, 501(c)(6) nonprofits, including destination marketing organizations, local newspapers, and TV and radio broadcasters are now eligible to apply.

I Already Took A PPP Loan During the Last Round of Funding. Can I Get A Second PPP Loan?

Yes! Even if you already received a PPP loan during the first stimulus bill, you are eligible to take an additional loan for your business. You may have heard this referred to as a “PPP Second Draw” or simply a “Second Draw”.

What  Are the Eligibility Requirements for These PPP Loans?

If you already took a PPP loan during the first stimulus bill, you have to meet the following requirements as a second-time PPP borrower to secure another loan for your business:

• You must have been in business as of February 15, 2020.
• Must have less than 300 employees
• Must show at least a 25% drop in quarterly revenue in either Q1, Q2 or Q3 of 2020, compared to the same quarter in 2019
• Business that got a first PPP loan must have used, or plan to use, their full PPP loan already received.

Can A Second Draw PPP Loan Be Forgiven?

Yes. But for full forgiveness you must spend 60% of your loan amount on payroll costs.

What Is the New, Simplified Loan Forgiveness Application?

A new, simplified one-page forgiveness application will be released shortly. This form will be available for PPP loans of $150,000 or less from both the first round of the stimulus package and the second one.

How Much Money Can I Receive?

Under the new law, the maximum amount of each PPP loan is $2 million. The exact loan amount will be determined by calculating a business’s average total monthly payroll costs multiplied by a factor of 2.5%. Businesses with a NAICS code beginning in 72 (generally hospitality businesses) may receive up to 3.5 times average monthly payroll cost.

What Counts as Eligible Expenses to Spend My PPP Funds On?

In order to qualify for full PPP loan forgiveness, you must spend a minimum of 60% of your funds on payroll. The remaining 40% can be spent on eligible expenses such as:

• Rent
• Utilities
• Operating costs including cloud computing, human resources, or inventory management
• Mortgage interest
• Covered supplier costs
• Property damage costs due to looting or vandalism during the events of 2020
• PPE expenditures to protect employees

What is the PPP Round 2 Application Date?

While the final regulations for this second round of PPP funding have not yet been issued, the Small Business Administration (SBA) must provide regulations within 10 days from when the bill was signed into law (Sunday, December 27, 2020). This means that the PPP round 2 loan applications will likely be available in early January.

How Long Do I Have to Spend the Money?

Businesses have 24 weeks from receipt of the loan to spend the funds.

What are the New Rules Regarding Tax Deductions?

Under the new stimulus bill, PPP loans will no longer be counted as taxable income. This change is for new and existing PPP loans and will mean that the expenses paid with a PPP loan are also tax-deductible. In addition, PPP loans that have already been forgiven will no longer count as taxable income. We recommend consulting with a CPA for more information.

What About the EIDL?

$20 billion has been allocated to new EIDL Grants in the stimulus package. These grants will be solely for businesses in low-income communities who employ less than 500 employees and have suffered a financial loss of more than 30%.

Are There Any Other Grants Available to Help Small Businesses?

Yes. The SBA has allocated $15 billion in dedicated grant for live venues, independent movie theaters, and cultural institutions. These funds are to help with payroll costs for employees and for operational costs like rent, utilities, and maintenance of the property. It is important to note that these businesses can either choose this grant or the new PPP loan. You cannot receive both sources of funding.

Next Steps

SBG Funding will be continually monitoring any new developments and will relay new information as it becomes available. We recognize that the situation is constantly evolving, and navigating loan options can be complex and overwhelming. That’s why we’ll be adding new information and resources for small business owners impacted by the pandemic on our COVID-19 Resource Center as soon as it becomes available. If you have any questions, please contact us at (844) 284–2725 or email us at info@sbgfunding.com.

*SBG Funding is not an agent or lender for PPP loans. SBG Funding offers advisory services on a suite of commercial financing products and works with agents who specialize in helping small business owners looking to apply for PPP Loans. As part of our service, we are happy to refer you to these agents and help guide you through the process at no charge. You are not required to change your banking relationship in order to apply either!