SBA Opens Second Round of PPP Applications
On Saturday, January 9th the Treasury and the SBA released new PPP guidance and application forms. The new guidance includes overviews of the First and Second PPP draws and the Revised PPP1-Borrower-Application-Form and Second-Draw-Borrower-Application-Form.
New Loan Funding Details For PPP1 and PPP2
The Consolidated Appropriations Act (CAA) signed into law a couple of weeks ago, included changes to PPP1, in addition to authorizing PPP2. Businesses that did not access PPP1 under the CARES Act may now do so and businesses that already took PPP1 loans may now apply for additional loans through PPP2.
Both PPP1 and PPP2 are available through March 31, 2021.
PPP1 & PPP2 Eligibility Requirements :
- Available to businesses with 300 or fewer employees
- Received and used (or will use) any PPP1 loan proceeds for eligible expenses.
- Have experienced a 25% drop in gross receipts during Q1, Q2, Q3, or Q4 of calendar 2020 versus a comparable quarter in 2019. Also, you compare the year as a whole. 2020 gross receipts should be compared to 2019’s tax filings for substantiation.
PPP2 Applications Requirements:
- Must complete the Second Draw Application Form 2483-SD
- The maximum loan amount is the lower of $2 million or 2.5 times monthly payroll costs (3.5 times for the accommodation and food services sector).
- Payroll costs are calculated using one of the following: 1) 12 months preceding the loan date, 2) 2019 calendar year or 3) 2020 calendar year.
- Key point - The borrower can use the same 2019 payroll costs and the same bank and avoid providing documentation supporting the monthly payroll costs claimed.
- If the PPP2 loan request is for $150,000 or greater, the borrower must provide supporting tax forms, quarterly financial statements, or bank statements to substantiate the decline in gross receipts at the time of the PPP2 loan application. See the instructions for determining eligible gross receipts for purposes of the 25% decline test on page 4 of the Application.
- For PPP2 loans less than $150,000, the borrower can wait until applying for loan forgiveness to provide the documentation to substantiate the decline in gross receipts.
- As with PPP1, the same borrowing and forgiveness terms and conditions apply to PPP2.
- Borrowers must still certify that current economic uncertainty makes the loan request necessary to support ongoing business operations.
- Affiliation rules and related waivers (i.e. franchised businesses) continue to apply.