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Rules for Round 2 PPP Funding


The significant difference in favor of business for Round 2 PPP is that the final legislation reduced the eligibility requirement to businesses that suffered at least a 25% drop in gross revenue in ANY quarter of 2020 (changed from 30%).

Also, EIDL advances previously deducted from loan forgiveness are now eligible for forgiveness.

This makes more businesses eligible because gross receipts only have to be down significantly [25%] for one of the 4 quarters of 2020. Many businesses were in that 25%-30% cusp.

We don’t’ have full guidelines yet, but here are most of the other basics. [Full guidelines are required to be released by the SBA within 10 days of signed legislation]

Eligibility:

The Round 2 PPP loans are available to borrowers that previously received a PPP loan. Those businesses that did not get the first PPP, for some reason, should be able to apply for both loans.

Round 2 PPP loans are limited to businesses that (a) employ no more than 300 (b) have or will have used the entire amount of their first PPP loan, and (c) had gross receipts during any quarter of 2020 that were at least 25 percent less than the gross receipts from the same quarter in 2019.

As with the first PPP, there might be a “necessity requirement” [although it is unknown if that will be dropped], which required all borrowers to certify that the "economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant" as of the date on which the PPP loan application is submitted.

The extension of the Round 2 PPP to Schedule C filers (sole proprietors), and 1099 contractors, and partners/members in business partnerships/LLCs is expected, similar to the Round 1 PPP.

Maximum Loan Amount:

The calculation is basically the same as Round 1 PPP, which was 2.5 times the average monthly payroll cost for 2019. Round 2 PPP allows you to use 2019 or 2020. If employment is seasonal, similar rules are expected to apply as in Round 1 PPP.

Additional Covered Expenses:

In addition to expenses that could have been paid with Round 1 PPP funding, the following types of expenses are now also included:

  • Business software and cloud computing services that facilitate product or service delivery, business operations, and/or the tracking of supplies, inventory, etc.

  • Expenditures to a supplier of goods that are essential with respect to perishable goods at any time during the covered period, and to non-perishable goods orders in effect at any time before the covered period

  • Worker protection expenditures to comply with guidance issued by the CDC and similar regulatory organizations [HHS, OSHA], and state and local governments

Forgiveness:

The Round 2 PPP loan is expected to be forgivable based on similar criteria as the Round 1 PPP.

EIDL Advances NOT to be deducted from forgiveness:

The Act now provides that EIDL Advances will not reduce PPP loan forgiveness. The SBA has indicated that borrowers that already received forgiveness and had their EIDL Advance deducted from such forgiveness may be able to amend their forgiveness applications. Further guidance is expected to be issued.

We will provide more information about applying for Round 2 PPP funding as guidelines are released.

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