The second round of PPP funding has begun. Call PPP2, if you will.
And some banks started applying for the paycheck protection program on 11 January. The second round of PPP funding includes $ 284 billion, and $ 60 million of that is for businesses that did not get loans for the first time.
The PPP is an apology designed to help small businesses struggle to keep employees on their payroll through the coronaryus epidemic. If the borrowing small business spends money received through PPP loans, it does not have to pay back to the bank.
Towards the beginning of the COVID epidemic, millions of small businesses in the US applied for and received loans in the initial round of financing in 2020.
While the program was largely celebrated for offering some financial help to small businesses that suddenly shut down due to virus mitigation efforts implemented by federal, state and local governments, there were some examples of fraud that are still being investigated and exposed Huh.
This second round of PPP loans was approved as part of an epidemic stimulus bill recently passed through Congress and signed into law by President Donald Trump.
Second round of PPP loan is now going to small businesses
Community Financial Institutions (CFIs) will be the first lenders to accept applications. CFIs include community development financial institutions, minority depository institutions, certified development companies, and microglone intermediaries.
Only 10% of PPP loans came through CFI in the first round. And applications will only be exclusive to CFI for a short time. In a few days, other lenders will offer a second round of loans.
CFIs handle loan apps first
Why roll out for CFI? Promote access to capital for new borrowers and some existing PPP borrowers.
The Small Business Administration (SBA) announced that only community financial institutions will be able to take a first draw PPP loan on Monday, January 11 and a second draw PPP loan on Wednesday, January 13. The PPP will open to all participating lenders immediately thereafter.
This round of PPPs continues to prioritize the millions of Americans employed by small businesses, authorized up to $ 284 billion in job retention and some other expenses through March 31, 2021, and some current PPP borrowers in other PPPs. Allows to apply for a loan.
How to qualify
You must prove a 25% drop in revenue of gross receipts. Gross receipts include sales of products and services, interest, dividends, rents, royalties, fees or commissions.
Need to know the fact – Your gross receipts do not cover the amount of the first round PPP loan.
Estimates of 25% decline in revenue are easy this time. You can verify the loss using an annual tax return. You can compare from 2019 to 2020.
If you have not completed the 2020 annual return, you can compare quarterly reports in 2019 and 2020 by matching time.
Did you use the 2019 data to get the first round PPP loan? If so, you can use the same figure to apply for a second draw if you go to the same lender and the loan amount is less than $ 150,000.
If the loan amount exceeds $ 150,000, you will need to supply quarterly financial or tax statements from 2020.
If you got a loan in the first round, can you get a loan in the second round? Yes, if you have or will use the entire amount, there are less than 300 employees and this can prove that there is a 25% reduction in gross receipts.
Adjusted time for calculating average monthly payroll
You can calculate the average monthly payroll using any 365-day period, as long as the period starts after January 1, 2019. In other words, you can use from February 1, 2019 to February 1, 2020.
The maximum amount of debt you will receive will be equal to 2 of the month or $ 2 million dollars of your average payroll cost – whichever is less.
What’s New With PPP2?
Some changes have been made to the paycheck protection program for the second round of loans:
- PPP borrowers can set the covered period of their PPP loan to be between 8 and 24 weeks.
- The PPP loan will cover additional expenses, including operating expenses, property damage costs, supplier costs, and worker safety expenses.
- The eligibility of the program is expanded to 501c6 organizations, housing cooperatives and destination marketing organizations, among others.
- PPP2 provides more flexibility for seasonal employees.
Some existing PPP borrowers may request to modify their first draw PPP loan amount; And
Some current PPP borrowers are now eligible to apply for a second draw PPP loan.
Are you eligible
If you will not qualify for the loan:
- You have not spent all the money from PPP loans before on qualified expenses.
- Your business is in bankruptcy.
- Your business was ineligible on loan from SBA or any other federal agency during the last 7 years.