Don’t Miss Out on Next Wave of PPP Funding
Filed under:COVID Updates
The enactment of the Consolidated Appropriations Act of 2021 (CAA) has provided much needed relief to struggling business owners in providing a new wave of Payroll Protection Program funding (PPP). The CAA includes another $284 billion in funding for forgiveable loans through the PPP.
Below you will find a summary of the latest information, which may be helpful to business owners:
First Draw PPP Loans
The SBA is reopening the PPP for First Draw Loans that either missed out on the first round of funding by not submitting an application, or other First Draw borrowers that previously returned some or all of their First Draw PPP loan funds. The rules are the same for the reopened First Draw Loans as the original program.
Borrowers seeking a First Draw PPP Loan must apply no later than March 31, 2021 through any existing SBA7(a) lender or through any federally insured depository institution participating in PPP.
Second Draw PPP Loans
Borrowers that have previously received a First Draw PPP Loan as per above, can now apply for a Second Draw PPP Loan with the same general loan terms as the First Draw PPP Loan only if they meet the following eligibility criteria:
- Previously received a First Draw PPP Loan and will or have used the full amount only for authorized uses,
- Have no more than 300 employees, and
- Can demonstrate that it has at least a 25% reduction in gross receipts for any one quarter of 2020 compared to 2019.
The CARES Act, which created the PPP, limited allowable uses of forgiveable loan funds to payroll, mortgage, rent, and utility payments. The CAA expands the allowable uses to include the following additional expenses:
- Covered operating expenses, including software or cloud computing services that facilitate business operations, product and service delivery, payroll processing, human resources, sales and billing, accounting or tracking supplies, inventory, records, and expenses,
- Uninsured costs related to property damage, vandalism or looting during 2020 public disturbances,
- Supplier costs according to a contract, purchase order or order for goods, in effect before taking out the loan, that are essential to the borrower’s operations, and
- Worker protection expenses incurred to comply with federal or state health and safety guidelines related to COVID-19 (for example, personal protective equipment, ventilation systems, plastic partitions, and drive through windows).
As with First Draw PPP Loans, in order to receive full forgiveness, a business must spend at least 60% of the funds on payroll over the covered period, which may range from 8 to 24 weeks.
The maximum loan amount for Second Draw PPP Loans is 2.5X average monthly 2019 or 2020 payroll costs up to $2 million. Any businesses in the Accommodation and Food Services sector, the maximum loan amount is 3.5X average monthly 2019 or 2020 payroll costs up to $2 million.
Borrowers seeking a Second Draw PPP Loan must apply no later than March 31, 2021 through any existing SBA 7(a) lender or through any federally insured depository institution participating in PPP.
The Jones & Roth PPP Loan Forgiveness Task Force is here to support you. For more information or to speak with a member of the Jones & Roth PPP Loan Forgiveness Task Force, please contact us.