What To Know
What do I need to be eligible for a PPP loan in the new round?
- Demonstrate at least a 25% reduction in gross receipts (to be defined by SBA) in any quarter of 2020 relative to the same quarter in 2019
- Employ fewer than 300 employees per physical location
- Demonstrate that you have used or will use the full amount of your first PPP loan
- A business that was not in operation on February 15, 2020 shall not be eligible for an initial PPP loan and a second draw PPP loan
What else has changed?
- Borrowers in industries assigned to NAICS Code 72 are entitled to receive loans up to 3.5x their average monthly payroll costs, during the year prior to the loan or the previous calendar
- Expenses allowable and forgivable are expanded to include certain payments for software, cloud computing expenses, property damage, supplier costs, and worker protection
- Forgiveness has gotten much easier: a simplified one-page application process for loans under $150,000.
Paycheck Protection Program, 2nd Round – Frequently Asked Questions:
1) I already received one PPP loan. Can I apply for a second loan?
Yes, under borrowers that previously received a PPP loan can apply for a second loan if they meet certain eligibility criteria. For example, borrowers applying for a second PPP loan must have 300 or few employees. For companies applying for a second PPP loan, the maximum loan amount is $2 million. Businesses applying for a second PPP loan will have to demonstrate at least a 25 percent reduction in revenue between corresponding quarters in 2019 and 2020.
2) What can PPP loan funds be used for?
- Payroll costs, including compensation, employee benefits, and employer-paid taxes
- Rent or lease payments
- Mortgage interest payments
- Utilities
- Personal protective equipment (PPE) and facilities updates to operate safely during the COVID-19 pandemic
- Software or cloud computing costs for business operations
- Costs related to property damage and vandalism or looting due to public disturbances not covered by insurance or other compensation
- Costs of the supply of goods that are essential to business operations
- Covered worker protection expenditures that help adapt business activities to COVID safety requirements
3) Who is it best for?
Businesses applying for their first PPP loan must have 500 employees or fewer to be eligible. Previous PPP loan recipients with less than 300 employees can also qualify if they have more than a 25% drop in revenue quarter over quarter from the previous year. If you are applying for your second PPP loan, you will need to have used the full amount of funds from your first PPP loan before your second is disbursed.
4) How much can I borrow?
Eligible businesses will be able to apply for PPP loans with ApplyforPPP.com from $10,000 up to $2 million. Our streamlined application will even help you calculate the allowable loan amount for your business based on your payroll information.
5) What are the loan terms?
PPP loans are 100% federally guaranteed and have a low interest rate of 1.00%. There is no collateral required. It is anticipated that, like in the earlier rounds of PPP, no repayment will be necessary for the first six to eight months. As long as the funds are used as designated, for eligible borrowers all or a portion of the PPP loan can be forgiven.
6) I haven’t applied for forgiveness on my first loan yet. Can I apply for a second loan?
Yes, borrowers that meet eligibility criteria for a second loan can apply for a second loan before applying for forgiveness for their first PPP loan. However, borrowers must have spent all proceeds from their first PPP loan prior to disbursement of the second loan.
7) I didn’t apply for a loan earlier in 2020. Can I apply for a PPP loan now?
Yes, PPP loans are available for both first- and second-time borrowers.
8) What documents do I need to begin to gather?
- 2019 Tax Return and Employment Tax Form
- S Corporation: Form 1120S and Form 941 (4 quarters)
- C Corporation: Form 1120 and Form 941 (4 quarters)
- LLC / Partnership: Form 1065 and Form 941 (4 quarters)
- Sole Proprietor or Independent Contractor: Form 1050 Schedule
- Non-profit: Form 990 and Form 941 (4 quarters) or 944
- Voided Check
- Driver’s License or Other Form of Identification
9) What can I expect when I apply?
Our borrower-friendly application makes it simple for you to input your information and upload the required documentation. You can also save and access your application at a later time via your secure link and PIN.
10) What about loan forgiveness?
When you’re ready to apply for loan forgiveness, our integrated application allows you to use your securely stored financial information to ensure fast turnaround.
11) Do I calculate my revenue based on cash or accrual basis accounting?
Revenue will most likely be determined by cash accounting. The legislation clearly states “gross receipts”. The SBA will confirm this by January 6th.
12) Does my first PPP loan count as revenue in the quarter I received it?
No. The PPP loan would appear on your balance sheet and not count as income in the quarter received.