PAYCHECK PROTECTION PROGRAM ( PPP ) 2.0
PAYCHECK PROTECTION PROGRAM ( PPP 2.0 )
The economic fallout from COVID-19 has continued to wreak havoc with hundreds of thousands of small businesses shuttering their businesses . After months of Congressional wrangling , the recently passed 2021 Consolidated Appropriations Act provides $ 284 Billion additional funding to support new Paycheck Protection Program ( PPP ) forgivable loans .
The new funding will allow small businesses that sustained significant revenue reductions in 2020 to apply for a second PPP loan . Additionally , first loans will be available to small businesses meeting the expanded qualifying criteria . The loan application window closes March 31 , 2021 . Small businesses that move quickly will be served first .
What are criteria and provisions for second-time borrowers ? Businesses that qualify for a PPP “ Second Draw ” loan can have no more than 300 employees , must show a 25 % year over year decline in quarterly gross revenue in any of the four quarters of 2020 , and have used 100 % of their first PPP loan . Businesses , certain non-profit organizations , self-employed workers and independent contractors will qualify for second-draw loans .
If your business started in 2019 , you ’ ll have to limit your year over year revenue decline analysis to just the full quarters your business existed during 2019 . If your business was formed in 2020 , you ’ ll have to compare Q2 , Q3 , and Q4 against 2020 Q1 .
Second Draw loan amounts will be capped at $ 2Million . Small businesses assigned to the industry NAICS code 72 ( Accommodation and Food Services ) will receive PPP second draw loans equal to 3.5X average monthly payroll costs to help these businesses combat onerous state and local restrictions .
Borrowers should be aware it is unclear whether or not the necessity requirement will be modified with the Second Draw Loans . The first PPP loans required all borrowers to certify that the “ current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant ” as of the date on which the PPP loan application was submitted . We expect to see specific guidance on the certifications required in the coming weeks .
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