What You Need to Know about the Second Round of PPP

Author : Camputaro & Associates
Feb 01, 2021

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Congress finally approved a second round of COVID-19 relief for both businesses and individuals earlier this year. According to a poll conducted by Alignable, 85% of American business owners reported that they need financial assistance to remain afloat through the remainder of the COVID-19 crisis. This additional relief is coming in the form of a second round of Paycheck Protection Program (PPP) Loans, as well as some other grants and loans. For this article, we’ll discuss what you need to know about the PPP expansion and how to get another round of support for your business.

What’s Included in the Expansion?

The new legislation includes an additional $284 billion for the Paycheck Protection Program while also extending the program through the end of March. Obviously, this means that your chance to claim another round of PPP is limited, so it’s important that you take advantage of the additional funding as soon as possible if you need it.

What If I Already Got a PPP Loan?

Even if you received a PPP loan the first time, it is still possible to receive another round of funding, so long as you meet certain qualifications:

  • You have no more than 300 employees. If you have multiple locations, you must have no more than 300 employees per location.
  • You can demonstrate a loss of 25% in gross receipts in any quarter of 2020 when compared to the same quarter in 2019.
  • You have used the full amount of your first PPP loan, or will have used the full amount before the second loan would be disbursed.

If you meet these requirements, the new program can provide a second PPP loan of up to $2 million, depending on your business’s financial losses. (We’ll discuss how your loan amount is calculated in a later section.)

What If I’m an Independent Contractor?

The name of this business relief program caused some confusion the first time around, and there are some who are still uncertain about whether or not independent contractors and solopreneurs are eligible for these loans. Despite its name, you do not have to actually issue paychecks to employees to qualify for the Paycheck Protection Program; this program is also intended to protect your paycheck as an independent contractor. So, yes, just as with small business owners, you are still eligible for PPP loans, even if you are your only employee.

Are New Business Types Eligible?

The expansion of the Paycheck Protection Program also broadened the types of businesses that could be eligible for a loan. Now, housing cooperatives, certain nonprofits, TV and radio stations, public broadcasters, and some local newspapers can be eligible for a PPP loan.

How Much Money Will I Receive?

While we can’t tell you for certain exactly how much of a loan you’ll be eligible for, in general, borrowers can receive a loan equal to 2.5 months of their average payroll costs. Average payroll costs are calculated from the actual payroll expenses one year prior to the loan. The one exception to this is for businesses in the Accommodation and Food Services industries, which can qualify for up to 3.5 months of payroll expenses. As mentioned earlier, the maximum loan amount for any business is $2 million.

Is the Forgiveness Process Any Easier?

If you went through the complex forgiveness process for your first round of PPP lending, you’ll be happy to know that the forgiveness process for loans up to $150,000 is significantly easier. They also revised the loan processing fee tiers to encourage lenders to provide loans to underserved businesses. So, don’t let a former denial of PPP lending or a complicated loan forgiveness process deter you from applying! This round of financial support should be easier to receive for many underserved industries, and will be easier to receive forgiveness from for most small businesses.

With a vaccine available and being widely distributed, there seems to finally be a light at the end of the dark tunnel that is the COVID-19 crisis. But many businesses are already hanging on by a thread, and if you need financial assistance to reach the end of the tunnel, we strongly encourage you to pursue a second round of PPP funding. Remember, the Paycheck Protection Program has only been extended through March 31st, so you should apply as soon as possible. If you need assistance filling out your loan application, feel free to contact us and speak to one of our business accounting experts here at Camputaro & Associates.

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Camputaro and Associates
Certified Public Accounting Firm
136 N. Orchard Street, Suite 8
Ormond Beach, FL 32174
(386) 255-2511