In just under a year, the Paycheck Protection Program (PPP) has provided more than 8 million loans totaling more than $700 billion. Demand for relief funding by small business owners across America remains strong.
If you previously received a PPP loan – even during 2021 - you may be eligible for a second one if you meet the SBA’s requirements and deadlines as outlined below.
PPP 2021 deadline extended
The PPP was originally scheduled to end on March 31 2021. However, the deadline to apply has been extended to May 31 2021, giving eligible businesses extra time to apply for the funds they need. The extended application period is for those getting either a 1st or 2nd PPP loan.*
Can I apply for a 2nd PPP loan?
Yes! However, you must have spent the full amount of your initial loan on eligible expenses or will do so by the time your second-draw loan is disbursed and you meet the other SBA eligibility requirements (general eligibility requirements are listed in the next FAQ).
Who may qualify for a 2nd PPP loan
A borrower is generally eligible to apply for a Second PPP loan if the borrower:
- Previously received a first PPP loan and will or has used the full amount on authorized uses
- Has no more than 300 employees
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020; and
- Otherwise meets all SBA and lender requirements
Forms for a 2nd PPP loan in 2021
The Small Business Administration (SBA) has created specific forms for 2nd time PPP borrowers. You can access them via the SBA’s website below:
Below is a new form this year, allowing Independent Contractors, Gig Economy Workers, and Freelancers to apply for more funding based on Schedule C numbers:
Can I apply for the same amount as my first loan?
The amount of your second loan depends on your payroll costs or your gross income if you’re self-employed, a sole proprietor, or a single member LLC that files on a Schedule C. For additional information, read our blog post article: How Self-Employed, Independent Contractors, and Gig Economy Workers Can Apply for a PPP Loan Prior to Filing 2020 Taxes.
Most eligible businesses can receive up to 2.5x their average monthly payroll costs for calendar year 2020 or 2019. (Note that businesses in the accommodation and food service industry can now receive up to 3.5x payroll costs.)
The maximum loan amount is capped at $2 million for second PPP loans, compared to $10 million for first PPP loans.
I haven’t used up my first PPP funds. Can I get a second PPP loan?
Second PPP loans are only available to businesses that have spent the full amount of their initial loan on eligible expenses or will do so by the time their second-draw loan is disbursed and meet the other requirements.
Are the forgiveness requirements for second PPP loans the same as the first PPP loans?
Loan forgiveness requirements for second-draw PPP loans are generally the same as those for first-draw loans. The funds need to be spent on covered costs within 24 weeks. PPP loan funds may be used for the following approved expenses:
- Payroll costs or individual salaries
- Insurance benefits
- Employee salaries and/or commissions
- Rent payments and/or mortgage payments
- Software or cloud computing costs for business operations NEW
- Costs related to property damage and vandalism or looting due to public disturbances not covered by insurance or other compensation NEW
- Costs of the supply of goods that are essential to business operations NEW
- Covered worker protection expenditures that help adapt business activities to COVID safety requirements NEW
At least 60% of your total second-draw loan must be used on payroll costs to receive full forgiveness. The remaining funds can be used on other allowable expenses.
Common PPP loan application mistakes that can prevent SBA approval
Of course, not every application is approved swiftly. Here are some issues to avoid when applying.
- An incomplete application. It is important that you complete your application fully and accurately before you submit it to any lender or lender service provider. Don’t leave anything blank. Providers prioritize applications they can immediately identify as complete.
- Missing documentation. These might include bank statements and other documents that are needed based on your entity type. The more documentation you provide that is requested by the lender, the faster your loan provider can best determine your qualification level and prepare your application to move forward.
- Improper documentation. Original PDFs are ideal, scanned copies can also work, and photos of your documents should only be submitted as a last resort.
How SmartBiz Loans can help
Let SmartBiz help you apply for a first or second PPP loan so you can protect and build your small business. We’ve helped banks in our network process over $5 Billion in SBA, PPP and term loans.
For those that file a 1040 Schedule C, the PPP loan application now uses gross income to help eligible gig workers, independent contractors, self-employed, and other small business owners qualify for larger loan amounts so you can protect and support your business.
Simply start an application here: Apply for a PPP Loan Now
For additional information about applying, our video walks you through the Paycheck Protection Program loan application process, with pointers on what you'll need to complete the application.
*What you need to know: The availability of PPP loans remains subject to SBA guidance and other factors, including the amount of funding available to banks and the quantity of eligible applicants considered on a first-come, first-served basis. The information provided above is for educational purposes only. Please consult the SBA’s website for actual rules and the most current guidance.