For those who are still planning on applying for the second round funding of the PPP program, the deadline remains March 31, 2021. Although there is a bill currently in Congress to extend the application period, it is best to plan accordingly and complete your application with the March 31 date in mind. We will inform you of any updates as they become available. Below are details from an earlier email outlining the program.
|Second Round Funding (PPP2)
The Act provides additional PPP funding for small businesses. The last day to apply for second draw funding is March 31, 2021. It is available to hardest hit borrowers who have used up the PPP funding they received under the CARES Act.
There are some significant changes as to who may apply. Borrowers must:
- Have fewer than 300 employees (down from 500).
- Be able to show a 25% drop in gross receipts over the same quarter in 2019 using company’s normal accounting practices.
- Gross receipts include all revenues from the normal operation of the business (reduced by returns and allowances and before subtraction of expenses) and includes interest, dividends, rents, royalties and commissions.
- Amounts received for PPP loans are excluded.
- Alternative approach uses comparison of total annual 2019 receipts to 2020 total annual receipts. Annual tax returns will be used to substantiate the decline.
- Have used or will use full amount of first draw funds on eligible expenses.
- Loans will be equal to 2.5 multiplied by average 2019 monthly payroll costs or the twelve month period prior to the loan date (simplified calculation can use 2020 payroll period), except for the hospitality industry which will use a multiple of 3.5.
- Can choose a covered period between 8 and 24 weeks.
- Maximum amount of Round 2 loans is $2 million
Second Draw Process:
- SBA Form 2483-SD (Paycheck Protection program Second Draw Borrower Application Form)
- PPP Second Draw Borrower Application Form – Schedule C Filers Using Gross Income
- Total funding between the first and second round cannot exceed $10 million (maximum PPP loan amount).
- Look to use original lenders (lenders approved for first draw loans may make second draw loans).
- Fintech companies are also offering PPP funding.
Documentation Required for Second Round Funding
- Similar to first draw loans.
- No additional documentation will be needed to substantiate payroll costs if using same 2019 figures for both 1st and 2nd draw loans and lender is the same.
- For loans over $150,000, documentation on revenue decline must be submitted with the loan application.
- Annual tax returns
- Quarterly financial statements
- Bank statements
- For loans $150,000 or less, documentation on revenue decline is submitted with the application for loan forgiveness (not with the loan application).
- Certifications required with 2nd draw:
- Reduction in gross receipts
- First draw used only for eligible expenses
Additional information can be found on the sba.gov website.