PPP Round 2: Small Business Relief
PPP Round 2: Small Business Relief
By now you are aware that Congress has enacted a second round of forgivable PPP funding for small businesses with the recently passed “Relief” bill. Round 2 will operate similar to the first with a few variations along with a welcome simplified forgiveness process.
Who Qualifies?
Must have at least 25% revenue loss to qualify. Unlike Round 1, which had no qualifiers other than business necessity/uncertainty, to qualify for Round 2 you must have experienced a revenue loss of 25% or greater in any one quarter of 2020 compared to the same quarter of 2019. Or, if easier, you can compare annual 2020 revenue to 2019 revenue in determining your 25% gross revenue decrease. NOTE: Revenue does not include PPP Round 1 funding.
What if my business opened in 2020? Your business must be open by February 15, 2020 in order to qualify for Round #2.
Businesses with over 300 employees don’t qualify. Round 1 had a limit of 500 employees. Round 2 has a cutoff at 300 employees.
Does my Round 1 PPP loan have to already be forgiven to qualify. No. However, you must have used all Round 1 funds by the time you apply for Round 2.
How Much?
The maximum loan amount is $2 million. The maximum was $10 million in Round 1.
How do I determine the loan amount? Similar to Round 1, the loan amount will be 2.5 times 2019 average monthly payroll, although you can choose to use 2020 payroll if it’s higher than 2019.
Restaurants and Entertainment Businesses qualify for higher funding amounts. The loan amount will be 3.5 (verses 2.5 for all others) times your average monthly payroll in 2019 (or 2020, if higher). Congress is attempting to assist the many food and entertainment businesses that were particularly hammered in 2020 with closures and limitations on customer usage.
Use of Funds
Broader use of PPP funds. Similar to Round 1, Round 2 can be used for payroll, rent, and mortgage expenses. The list was also expanded to include certain business operating expenses, workplace protection costs to protect employees from Covid-19 and uncovered property damage related to public disturbances.
Forgiveness
Are the loans forgivable? Yes, and simplified for many. Those with PPP Round 2 loans of $150,000 or less will use a one-page forgiveness application.
What do I have to do for forgiveness? As before, at least 60% must be used on payroll costs. You have between 8-24 weeks to use the funds, which should allow ample time to meet the “spending” requirements.
Will forgiveness be taxable? No. And expenses paid with forgiven funds can be deducted on the tax return.
Do I have to use the same lender? No. However, because most of the same info used in Round 1 will be used to determine Round 2, it may be advantageous to use the same lender who has this information on file.
Where and how do I apply? The initial deadline for applying is March 31, or until funds are gone.
Application is located at: SBA.gov/ppp
