The Small Business Administration (SBA) issued new guidance on which businesses are eligible and how to apply for the new round of the Paycheck Protection Program (PPP) funds as part of Congress’s Covid Relief Act authorizing $284 billion toward the small business loan program.
This second round of the SBA’s PPP forgivable loan program is for “any business that did not receive a PPP loan previously, or those businesses that experienced a 25% reduction in revenue in one quarter of 2020 over 2019.” Unlike the first round of PPP, this round of PPP caps new loans at $2 million and while first-time borrowers can have 500 or fewer employees as in round one of PPP, second-time applicants can only have a maximum of 300 employees.
Businesses, sole proprietors, and independent contractors applying for loans of $150,000 or less and based on the same calculation as round one (2.5 times one-month of 2019 payroll) do not have to submit new documentation if applying through the same lender. However, borrowers of loans in excess of $150,000 will have to document their reduction in gross receipts upon applying for round two of PPP. The simplest method to do so, according to the regulations, is to submit 2020 and 2019 tax returns if available. The new program will open as soon as January 11, 2021 to community financial institutions such as banks and credit unions that lend in low-income communities. The program will open to all other qualifying borrowers on January 13, 2021. The program will expire on March 31, 2021.
Virtus Law, PLLC continues to monitor developments in this (and other COVID-19 areas) and will continue to post relevant updates to this website.