How To Get a 2nd PPP loan

There are many, many, questions from small business owners across America about how the latest relief bill will impact their need for funding. Forgiveness was the big concern of 2021 but a new question has arisen: Can I get a second PPP loan if requirements are met?

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The answer is YES, with a few caveats. Learn more about the information available as of December 31, 2020.

Note: Current date for PPP application launch is now expected to be January 11 for 1st time PPP borrowers and January 19 for second round of funding.

How does the current approved round of PPP loans differ from the first?

Some aspects are broadly the same. Applicants have between eight and 24 weeks to use the funds, with at least 60 percent going toward payroll and the rest toward eligible expenses like rent and utilities.

New loans are capped at $2 million, compared to $10 million before. Applicants must have no more than 300 employees, instead of up to 500, and must demonstrate at least a 25 percent drop in revenues from the fourth quarter of 2019 to the same period this year. Restaurants and other hospitality businesses, can have no more than 300 employees in one location.

New businesses must demonstrate at least a 25% percent drop in revenues from the fourth quarter of 2019 to the same period this year. For a business started this year, the drop in revenue must be 30%.

The bill expands the type of covered expenses to include things like:

  • Cloud computing or remote-work software
  • Equipment for government-mandated safety and social-distancing, like masks, sneeze guards, or air filtration systems.
  • Property damage and vandalism or looting due to public disturbances that occurred during 2020.

One notable aspect of the new bill that’s not directly tied to new loans is an expansion of the employee retention tax credit, a facet of the Coronavirus Aid, Recovery and Economic Stimulus (CARES) Act that encouraged employers not to let workers go.

If I already received a PPP loan, can I apply for a 2nd PPP loan?

Yes. These are called “second draw” loans, and as long as you meet the qualifications above, you can apply.

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Do any businesses qualify for more funding than others?

New loan amounts are set by a formula that involves payroll costs multiplied by a factor of 2.5 (again, capped at $2 million).

Restaurants and other hospitality businesses may multiply those costs by 3.5, making them eligible for slightly more funding.

The bill restricts certain companies from applying for loans, including:

  • Businesses specializing in political or lobbying activities.
  • Businesses with extensive dealings in China, or who have China residents on their boards.
  • Concert venues, theaters and museums, which had long lobbied for additional aid, are not eligible for new Paycheck Protection Program loans, but can apply for special “Shuttered Venue Operator Grants” worth up to $10 million.

How will this impact my existing forgiveness application?

There is now a simplified forgiveness process for loans under $150,000.

How does a 2nd PPP loan impact forgiveness?

The government has simplified forgiveness applications for those who received less than $50,000, requiring only descriptions of how much was spent on payroll, and how many employees were retained. The new bill increases the limit to $150,000. Affected businesses must certify and attest to how they used the funds but will not need to submit documentation supporting their claims, but should keep it on hand in case of an audit down the line.

Your payroll processor can help you with this document: Paycheck Protection Program Loan Payroll Calculation: Your Payroll Processor Can Help.

Next Steps

Let SmartBiz help you get ready for the new round of the Paycheck Protection Program (PPP) just approved by Congress and the President*. While the SBA prepares to accept applications, we’ve put together a Prep List of the documents you’ll need for your PPP loan application. Download the Prep List and we’ll alert you when it’s time to begin your PPP loan application with us.

Sign up here to download the SmartBiz Loans PPP Prep List.

SmartBiz Loans® works with small business owners like you every day to help you apply for the funding you need. Since 2013, we’ve specialized in SBA (Small Business Administration) loans. The new round of the Continuing Paycheck Protection Program Act, to be administered by the SBA, makes continued financial support available to help eligible small businesses keep their employees and stay open safely during the COVID-19 pandemic.

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.

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