On January 6, 2021, the U.S. Small Business Administration (SBA) issued guidance around the second round of the Paycheck Protection Program (PPP). Businesses applying for PPP for the first time can find SBA guidance at Paycheck Protection Program as Amended by Economic Aid Act. Businesses that received PPP funding previously, can find guidance at: PPP Second Draw Loans. In either case, the maximum loan amount will be $2M and businesses can apply for loans through March 31, 2021.
Eligibility:
Second PPP loans are available for businesses:
- In operation as of 2/15/2020
- 300 or fewer employees
- Full amount of the first PPP loan will be used,
- Gross revenue decreased 25% in any calendar quarter 2020 compared to 2019
- If a borrower was in operation for all of 2019, they have the option to do an annual calculation as opposed to quarterly. If annual receipts are down 25%, the business qualifies
Loan Calculation:
Borrowers can calculate their PPP2 loan by calculating either 2.5x their monthly average payroll costs over the last 12 months (calendar year 2020 for ease for documentation) or 2.5x their monthly payroll costs for calendar year 2019. Restaurants and hotels will be eligible for 3.5x their average monthly payroll costs. There is a loan cap of $4M for businesses that are part of a single corporation.
Documentation:
- Same payroll documentation required (payroll tax returns) as with the first round of PPP loans
- No documentation is required if the borrower is using 2019 payroll costs and using the same lender
- For loans over $150,000 a decline in revenue must be documented by:
- Tax forms, or
- Quarterly financial statements, or
- Bank statements
- For loans less than $150,000, documentation of a decline is revenue is not required when submitted a loan application, but it will be required when filing for forgiveness
Application Process:
- SBA Form 2483-SD submitted to lender not available as of January 8, 2021
- Lender will submit applications to the SBA
- The combined loan of PPP1 and PPP2 cannot be more than $10M for an individual borrower or $20M for a corporate group
Forgiveness:
- Same costs as PPP1
- Payroll
- Mortgage, rent, utilities
- At least 60% of forgiveness costs should be for payroll
- New costs (can also apply to PPP1 if forgiveness application has not been processed)
- Protection expenditures: PPE and costs to comply with COVID-19 safety guidelines
- Supplier costs: Expenditures to a supplier that are essential to the recipient’s operations
- Operational expenditures: Software, cloud computing, and HR/accounting
- Property damage: 2020 public disturbances not covered by insurance
- Simplified form for loans less than $150,000
- One page form attesting to complying with PPP requirements
- Loan amount
- Number of employees retained
- Amount of loan spent on payroll
- Document loss of revenue
Another round of PPP funding is a great opportunity for struggling businesses. At CironeFriedberg, we are ready to help guide you through the many complexities of this program to ensure you receive the maximum loan and maximum forgiveness. You can reach us by phone at 203-798-2721 (Bethel), 203-366-5876 (Shelton), or 203-359-1100 (Stamford), or email us at info@cironefriedberg.com.
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