Congress passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act on December 27, 2020. As part of the act, an additional $284 billion in funding is available for Paycheck Protection Program (PPP) Loans.
In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized funding of approximately $350 billion. Funding was depleted by April 16, 2020, which necessitated additional funding of about $300 billion. The $248 billion authorized on December 27, 2020, is approximately 40% of the total COVID-19-related federal funding since March 2020.
Below, we cover application details for the second round of PPP funding, qualification criteria, and more.
Application Period
The following application periods apply for the second round of PPP loans:
- Lenders with $1 billion or less. Applications for additional PPP funding will be available through lenders with $1 billion or less in assets on January 15, 2021.
- All other lenders. The application window for all other lenders opens on January 19, 2021, and organizations are encouraged to apply as soon as possible. Updated application forms are available through the Small Business Association (SBA).
Eligibility
Entities that received a PPP loan during the previous funding are eligible to apply again for a loan of up to $2 million.
Criteria for Applying
To qualify for a second PPP loan, entities must meet the following criteria:
- Have 300 or fewer employees
- Used, or will use, the full amount of the first PPP loan on eligible expenses on or before the disbursement date of the second loan
- Experienced a 25% reduction or more in all or part of 2020, compared with all or part of 2019
- Make the same certifications as in the original PPP loan, including, “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”
First-Draw Eligibility
Entities could still avail themselves to first-draw PPP loans if they meet the following criteria:
- Were in operation on Feb 15, 2020
- Have 500 or fewer employees that are eligible for other SBA 7(a) loans
- Are sole proprietors, independent contractors, and eligible self-employed individuals
- Qualify as not-for-profit organizations, including churches
- Qualify as 501(c)(6) entities, including chambers of commerce and visitors’ bureaus
- Are destination marketing organizations that have 300 employees or fewer and don’t receive more than 15% of receipts from lobbying
- Are news organizations that are majority-owned or controlled by a North American Industry Classification System (NAICS) Code 511110 or 5151 business or non-for-profit public broadcasting entity under the same NAICS code, with a limit for this category of no more than 500 employees per location
Sports leagues aren’t eligible to receive first-draw PPP loans.
Forgiveness
Similar to the first round of PPP loans, the second round of PPP loans are eligible for loan forgiveness if they’re spent on qualifying costs—including payroll, rent, covered mortgage interest, and utilities. As part of the act, however, additional costs are now eligible for forgiveness, including:
- Personal protective equipment for covered worker protection
- Property damage costs not covered by insurance that are due to public disturbances in 2020
- Expenses to suppliers that are essential at the time of purchase
- Operating expenses for any business software or cloud computing services that facilitate business operations; product or service delivery or payment processing; tracking of payroll expenses, human resources, sales and billing functions, or accounting; or tracking of supplies, inventory, records, and expenses.
As with the first round of PPP funding, borrowers must spend at least 60% of the funds on payroll over their covered period of eight or 24 weeks.
Loans of $150,000 or Less
Borrowers that receive PPP funds of $150,000 or less shall receive forgiveness if they complete a one-page certification including a description of the following:
- Number of employees the borrower was able to retain because of the loan
- Estimated amount spent on payroll costs
We’re Here to Help
For more detail about the PPP program, please contact your Moss Adams professional. Additionally, if you’d like assistance with PPP forgiveness for your institution, explore our PPP loan forgiveness platform.