A new round of the Paycheck Protection Program (PPP) is available through the new COVID-relief stimulus bill. This round — like the first — will be in the form of forgivable loans to small businesses, but there are some key eligibility differences.
With this year’s round of PPP, they’re really trying to make sure they’re targeting those that for whatever reason, missed out on the first round. Small businesses hit hard by shutdowns, restrictions or tier systems will also have an advantage this time around.
The U.S. Small Business Administration announced January 19, 2021 that in just the first week of the program’s reopening from Jan. 11-17, they approved around 60,000 loan applications. This amounts to 5 billion dollars already going to help businesses in need as the applications continue to pour in.
These are some things you need to know about second round PPP loans:
- Second-time PPP businesses with a North American Industry Classification System (NAICS) code that begins with 72 will have a maximum $2 million cap or can use up to three-and-a-half times their monthly average payroll to come up with their maximum amount. If you don’t have an NAICS code of 72, you go with the first rules which is two and a half times your monthly payroll up to $2 million.
- First-time borrowers should refer to last year’s rules and will be eligible for the maximum $10 million amount and they also need to have less than 500 employees. Second-time borrowers will qualify for $2 million and have to show they have suffered a 25% reduction in gross receipts. You can also show that 25% reduction by comparing a quarter in 2020 to a quarter in 2019. If you’re a second time borrower, you have a limitation of 300 employees instead of 500 employees.
- The new round of PPP also expands non-payroll eligible expenses to include PPP such as cosmetic construction done to keep customers and staff safe. As long as you use 60% of the loan amount to your payroll costs and 40% to your non-payroll costs, then you will be eligible for forgiveness. Whether it’s the first or second loan, the 60/40 split still applies.
- If applying for a second PPP loan, consider going through the same lender as your first-round as they’ll have a lot of your previous documentation.
- Funding is set to expire March 31, 2021.
How to Apply for Second Round PPP Loans
The Paycheck Protection Program (PPP) provides loans to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. Here’s more information and how to apply for them:
- First Draw PPP Loans are being offered for first time program participants You can apply for a First Draw PPP Loan until March 31, 2021. SBA is currently accepting First Draw PPP loan applications from participating lenders. Lender Match can help connect you with a lender. You can also view all lenders near you on a map. All new First Draw PPP Loans will have the same terms regardless of lender or borrower. If you wish to begin preparing your application, you can download the following PPP borrower application form to see the information that will be requested from you when you apply with a lender: Paycheck Protection Program First Draw Borrower Application Form (revised 01-08-21)
- Second Draw PPP Loans are for certain businesses who have previously received a PPP loan. You can apply for a Second Draw PPP Loan from January 13, 2021, until March 31, 2021. SBA is currently accepting Second Draw PPP loan applications from participating lenders. You can download the following PPP borrower application form to see the information that will be requested from you when you apply with a lender: Paycheck Protection Program Second Draw Borrower Application Form (released 01-08-21)
Trust the Professionals at Goldin Group
At Goldin Group LLC, we can help small businesses with PPP loans and other accounting needs. We understand that as a business owner or non-profit manager, keeping up with accounting and taxes is time-consuming and can even be overwhelming. We work with nonprofits and businesses, offering a one-stop-shop for financial services. If you are a nonprofit looking to outsource your accounting or if you need help managing any aspect of your nonprofit’s finances, we would love to hear from you! Call us at (301) 913-0008 or email email@example.com to make an appointment.