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PPP Second Round Quick Tips 1

PPP Loans-Second Round and Loan Forgiveness

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PPP second-round quick tips.

Who is eligible?

  • Both first-time applicants and returning borrowers can apply.
  • NEW – Nonprofit housing cooperatives, newspapers, broadcasters and local chambers of commerce can now apply.
  • All businesses must have been in operation since Feb. 15, 2020 to qualify.
  • Self-employed business owners, including independent contractors, are eligible for loans – SBA requires sole proprietorships to have shown a profit on 2019 tax return to qualify.

First-Time Applicants

  • First-time applicants must abide by original rules. Company or nonprofit must generally have 500 or fewer workers (some industries can qualify with more). Applicants must certify that “current economic uncertainty makes this loan request necessary” to support their continuing operations.

Second-Time Applicants

  • Larger businesses no longer eligible: Second-loan applicants must have 300 or fewer workers. Publicly traded companies, political lobbyists and members of Congress are not eligible for second loan.
  • Must show a 25 percent drop in gross receipts between comparable quarters in 2019 and 2020. Must show all money from first-loan has been spent.

How and When to Apply

Borrowers can apply for a Second Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP. All Second Draw PPP loans will have the same terms regardless of lender or borrower.

How Much Can Applicants Receive?

For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and
Food Services sector, the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may: (1) reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or (2) under certain circumstances, request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.

List of Lenders

An (SBA) list of participating lenders as well as additional information and full terms can be found HERE.

Loan Forgiveness Terms

First Draw PPP Loan Forgiveness Terms

First Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:

  • Employee and compensation levels are maintained
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • At least 60 percent of the proceeds are spent on payroll costs

Second Draw PPP Loan Forgiveness Terms

Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8-to-24 week covered period following loan disbursement:

  • Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • At least 60 percent of the proceeds are spent on payroll costs

How and when to apply for loan forgiveness

A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender. Learn how to apply for loan forgiveness here.

For more in-depth information, visit the SBA’s website here.