Paycheck Protection Program - Round 2

Businesses that apply for this round of PPP must demonstrate a reduction in gross receipts of no less than 25 percent during the first, second, third, or — for applications submitted on or after January 1, 2021— fourth quarter in 2020, relative to the same quarter in 2019. 

​The bill limits eligibility for this round of PPP loans to business with 300 or fewer employees — rather than 500 or fewer employees — and caps the total loan amount at $2 million.

​eligibility

  • A second round PPP loans are available to businesses that were in operation prior to February 15, 2020.
  • You must show a loss in revenue in 2020. This is proven by showing a 25% (or more) reduction in gross receipts from any quarter in 2020 relative to that same quarter in 2019.
  • For example, if a business made $20,000 in sales in the second quarter (Q2) of 2019, they must show a reduction of at least 25% of that amount in the same quarter of 2020. So If the business recorded $15,000 or less in Q2 sales in 2020, they are eligible to apply for a second PPP loan.

For the food and accommodation
​industries

  • Special consideration was given to the food and accommodation industries. Any business with a NAICS code beginning with 72 is eligible for a greater loan amount. 
  • Businesses in these industries are eligible for a loan equal to 3.5 times your average monthly payroll costs. The average monthly payroll cost is calculated the same: using the one year period before application or the calendar year of 2019.

​For sole proprietors, partnerships and independent contractors without payroll

  • ​​Guidance has yet to be released on how these loans will be calculated. But if they are calculated the same as the first round of PPP loans, it would be as follows.
  • Sole proprietors and independent contractors were eligible for loans equal to 2.5 times their average monthly net income from 2019. The monthly net income was found by dividing the net income as reported on line 31 of a 2019 Schedule C by 12.
  • Partnerships were eligible for 2.5 times their average monthly distributions. Their average monthly distributions were calculated by taking their distributions from their 2019 Schedule K-1, multiplying it by 0.9235, then dividing by 12.

For seasonal
Businesses

  • ​To qualify as a seasonal business, you must satisfy one of the following criteria:
    • You do not operate for more than seven months in any calendar year
    • During the previous calendar year, your gross receipts for six months were no more than 33.33% of your gross receipts from the remaining six months (e.g. if you earn $100,000 from January through June, you earn no more than $33,330.00 from July through December)
  • Seasonal businesses are eligible for loans equal to 2.5 times their average monthly payroll cost. But the average monthly payroll cost can be calculated using any 12-week period between February 15, 2019 and February 15, 2020.

​For new businesses

  • ​A new business is defined as existing for no more than a year before February 15, 2020.
  • New businesses are eligible for loans that are 2.5 times their average monthly payroll. But their average monthly payroll will be calculated using their entire period of operation where payroll was run. Sum up the monthly payroll costs and divide by the months where payroll was run to find the average.

​​Eligible  Expenses

Employers who received a first draw PPP loan that has not yet been forgiven may use their PPP loan funds to cover these expanded qualifying expenses. Second draw PPP loan recipients are eligible for loan forgiveness equal to the sum of their payroll costs and expanded allowable expenses so long as at least 60 percent of loan funds are used for payroll costs.

​The expansion of PPP eligible expenses

​For the first roll out of PPP loans, eligible expenses included payroll costs, rent, and utilities expenses.
Included in this bill is an expansion of the eligible expenses you can use your PPP loan for. These new expenses include:
  • Operations expenditures: Any software, cloud computing, or other human resources and accounting needs.
  • Property damage costs: Any costs from damages due to public disturbances occurring in 2020 and not covered by insurance.
  • Supplier costs: Any purchase order or order of goods made prior to receiving a PPP loan essential to operations.
  • Worker protection expenditures: Any personal protection equipment or property improvements to remain COVID compliant from March 1, 2020 on wards.
These new eligible expenses apply to all PPP loans, including those obtained prior to August 8.

contact your PPP Lender today!

Clarksville Branch