Is Your Business Eligible for a Second PPP Loan?

In late December 2020, Congress passed a $900 billion Covid relief bill that, in addition to supplying much needed aid to individual earners and those on unemployment, gave $284 billion to the Paycheck Protection Program (PPP). Established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the PPP is a forgivable loan program with the purpose of incentivizing employers to keep their staff on the payroll. This second wave of funds comes as a welcome form of relief for employers who may not have gotten a chance to take advantage of the program when it was passed last year, or who need a “second draw” after using up their initial funds. So, is your business eligible for a second PPP loan?

For new borrowers, applications for this second round of stimulus opened on January 11, 2021. You’re eligible for a loan up to $10 million if your business has up to 500 employees.

Second-draw borrowers will be able to apply beginning January 13, 2021. This loan is applicable to businesses with less than 300 employees who have already exhausted their initial PPP loan and can prove they lost 25% of their revenue in at least one quarter of 2020. The key difference between this and the loans for first-time borrowers is these loans are capped at $2 million, rather than $10 million.an additional qualification is that your business can’t have permanently closed.

Second-draw loans are subject to a 60/40 breakdown of spending. To qualify for forgiveness, a minimum of 60 percent of the loan amount needs to be used on payroll. The other 40 percent can be used on mortgage, utilities, property damage, personal protective equipment (PPE), health and safety modifications, etc.

When the PPP was implemented in April 2020, it drew a lot of criticism for its lack of availability to minority-owned or disadvantaged businesses. Community financial institutions who serve these communities are the ones who get first dibs on these funds this time around. Larger financial institutions won’t be able to take advantage of the funds until a later date. There are also additional guidelines put forth by the Small Business Administration “to ensure increased access to PPP for minority, underserved, veteran, and women-owned business concerns.”

As with any of these government loan programs, it’s recommended you work with your accountants to get all of your documentation in order. While this second round of relief is far less complicated than the original PPP application, you’ll want to be sure you’re including all the details necessary to secure the funds you need. And remember, it’s important to act fast—these funds can only be applied for through March 31, 2021, and money is expected to go fast.

If you’re looking for a bank to apply for a PPP loan, we’re here to help! We’ve partnered with The Loan Source and Prime Commercial Lending to give you access to a PPP loan application so you can get your PPP loan quickly and easily. Plus, their white-glove service is above all else as they help you through the loan forgiveness portion and answer any questions that you have. Apply For The PPP