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5 Things to Know About the Second Set of PPP Loans

by Roseann Freitas Roseann Freitas | Feb 4, 2021 1:32:36 PM


UPDATE 3/30/21:

President Biden signed an extension to the Paycheck Protection Program. Small businesses seeking financial relief now have until May 31 to apply for a loan. The law also draws out the authorization of PPP loans to June 30 to allow the Small Business Administration time to process applications.

Update 2/23/21: 

The second round of PPP loans rolled out on January 11, 2021. Earlier this week, changes benefitting small businesses were made to that additional wave of financial relief. Here’s what you need to know as those updates go into effect on Feb. 24:

  • Only businesses with fewer than 20 employees will be allowed to apply for two weeks starting Feb. 24 and extending through March 10.

  • Revisions to the PPP funding formula now allow for companies without employees to receive more money. Included in the group are sole proprietors, self-employed individuals, and independent contractors.

  • Individuals with non-fraud felonies are now eligible to apply for PPP funding.

  • Business owners with student loan debt delinquencies are eligible for PPP loans.

  • Access given to non-citizen small business owners who are lawful US residents can use their Individual Taxpayer Identification Number (ITIN).

The deadline to file for a PPP2 loan is currently slated as Wednesday, March 31. Any business owner wanting outside help applying for financial relief via the PPP loan process is advised to connect with a trusted professional accountant.

For more information about PPP loans and other financial help available to small businesses, visit our Stimulus Package FAQ.

When the first round of the Payroll Protection Program (PPP1) rolled out in April 2020, it was designed to keep businesses afloat during a nationwide shutdown. However, once companies started to reopen, COVID19 cases increased and another economic setback ensued. The initial allotment of funds couldn’t cover the full extent of the downturn.

So, another round of the program has been introduced to provide business owners a second wave of relief.

What’s new about PPP2?

The newest round of PPP funding focuses on small businesses and eliminates many larger companies from applying:

  • Companies that didn't file for PPP1 can still apply for PPP2, but they only have until March 31, 2021. These First Draw businesses will only qualify if they have 500 or fewer employees.
  • Businesses that didn’t file for PPP1 qualify for this second round of loans only if they have 300 or fewer employees.
  • Companies that received the first PPP loan may also apply for round two. They just need to make sure all the funds previously loaned are spent.
  • 501 C (6) and destination marketing organizations with less than 300 employees qualify in round two. These organizations were excluded from the first PPP loan.
  • Local newspapers, TV & radio stations, and housing cooperatives qualify for PPP2.
  • The PPP2 loan amount is 2.5 times the average monthly payroll costs in the year prior or 2019 calendar year, except food service providers (NAICS code starts with 72) who receive 3.5 times the average monthly payroll costs.
  • Necessity certification is required. Companies must show a 25% decrease in revenue from 2019 to 2020 for loans of more than $150,000.

Where do I find a Necessity Certification? How do I fill it out?

In addition to submitting a a nine-page form, round two loans require a business to show an economic loss of 25% or higher from 2020 to 2019. Businesses can compare any quarter in 2019 to the same quarter in 2020 to show a loss or use overall revenue reduction.

May I spend the funds on additional expenses not included in the first round?

Yes. The split of 60% payroll and 40% other expenses introduced in PPP1 has remained for PPP2. What’s different, though, is that the second round of PPP money allows for expenses including PPE equipment, property damage, cloud computing, supplies, and other costs required by a government entity to comply with COVID restrictions.

What about loan forgiveness, gross income, deductible expenses, and EIDL loan? Are those included in the second round of PPP loans?
Changes to the first PPP loan were included in round two and benefited businesses:

  • Forgiven PPP loans are not included in gross income.
  • Expenses from either loan are deductible.
  • EIDL advance funds will not be subtracted from PPP forgiveness.

What types of companies do not qualify for PPP2?

Businesses are excluded from receiving a PPP2 loan if they:

  • Primarily engage in political activities or lobbying.
  • Were created, organized or owned (more than 20%) by any business concern in China or Hong Kong.
  • Have a board member who is a resident of China.
  • Registered under the Foreign Agents Registration Act
  • Received a Shuttered Venue Operators Grant.
  • Have a controlling interest(s) held by a president, vice president, head of an executive department, member of congress, or a spouse.
  • Issue securities listed on an exchange.
  • Previously received a PPP2 loan.
  • Closed permanently

Similar to the first PPP loan, the rules to apply for and then receive PPP2 funds are complex. Connecting with the funds available may require the help of a trusted professional accountant.

For more information about PPP loans as well as other financial help available to businesses visit our Stimulus Package FAQ

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