Who Can Apply for PPP2 Loans?
First Time PPP Borrowers (First Draw):
- Businesses in operations on Feb. 15, 2020
Loan limited to a maximum of $10,000,000
- Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
- Sole proprietors, independent contractors, and eligible self-employed individuals, Not-for-profits, including churches.
- Accommodation and food services that have fewer than 500 employees per physical location.
- Sec. 501(c)(6) business leagues have 300 or fewer employees and do not receive more than 15% of receipts from lobbying.
- Certain news organizations.
The interim final rule (IFR) issued by the SBA and Treasury for first-time borrowers consolidates the rules for PPP forgivable loans for first-time borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260.
Frequently Asked Questions (FAQ) issued by the SBA can be found here.
Click here for the Top-Line Overview of First Draw PPP Loans issued by the SBA and Treasury.
Previous PPP Recipients (Second Draw):
- Businesses with 300 or fewer employees.
Loan limited to a maximum of $2,000,000
- Used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be disbursed to the borrower. The borrower must have spent and will spend the full amount of the first PPP loan on eligible expenses.
Experienced a revenue reduction of 25% or more in all or part of 2020 compared with all or part of 2019. This is calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019, or, in a provision added in the IFR a borrower that was in operation for all four quarters of 2019 can submit copies of its annual tax forms that show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.
Please note, PPP borrowers with North American Industry Classification System (NAICS) codes starting with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs on second-draw loans.
PPP Forgiveness Update
- The SBA is still working on creating the simplified forgiveness application process for loans of $150,000 or less. We will update you once the application becomes available.
- If you plan to apply for a 2nd draw loan we suggest you wait to apply for forgiveness on your current PPP loan until you complete the 2nd draw loan application.
You have 10 months from the end of your loan covered period to apply for your PPP Forgiveness. Here is a link to the SBA PPP forgiveness website.
PPP Application Dates
- PPP applications were reopened on Monday, January 11, 2021 initially for community financial institutions (CFIs) to make loans to first-time PPP borrowers. CFIs were allowed to make second-draw loans to previous PPP recipients starting Wednesday, January 13, 2021. CFI lenders include Community Development Financial Institutions, minority deposit institutions, certified development companies and microloan intermediaries. The SBA’s goal is to ensure that underserved small businesses have the opportunity to access the funding.
The application window opened Friday, January 15, 2021 for lenders with $1 billion or less in assets.
The program will begin accepting applications for first- and second-draw loans from large lenders on Tuesday, January 19, 2021.
PPP Forms / Application Process
Overview of Application Process:
Businesses planning on applying should begin gathering key information now such as average monthly payroll amounts, quarterly revenue for second-draw borrowers, and other required documentation to speed the process.
It is anticipated that there will be more scrutiny in this round of PPP applications. The SBA will likely be doing more vetting for potential fraud and in some instances asking for more validation. Borrowers might be required by the SBA to certify that current economic uncertainty makes this loan request necessary to support the ongoing operations.
In general, first- and second-time PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020, or the year prior to the loan.
The forms also outline adjustments to the calculations for seasonal businesses, new businesses, farmers and ranchers, and partnerships.
If you do not work with an eligible lender you can find them here: Click Here