1. If I got the first round of PPP funding, am I still eligible for the second round?
Round 2 of PPP funding is only available to those who have utilized their first round of funds or are about to soon. Your second round of funding cannot start until the period covered by the first round has ended. Check out where you are with your spending to make sure you are on track.
2. Are there restrictions or limitations on what I can use the PPP funds for? And when I can use them?
Just like the first round of funding, you have a 60/40 split. This means that at least 60% of the expenses these funds are used for need to be focused on payroll costs, which have the same definition as the first time around, and up to 40% of the funds can be used on additional items like rent, mortgage interest, property tax, utilities, COVID-19 protection for staff, etc.
Allowable payroll costs are any form of wages, employer health and retirement contributions, and state unemployment tax.
Allowable costs of the nonpayroll kind include mortgage interest (on real OR personal property), rent or lease expenses (on real OR personal property meaning equipment leases would count), and utilities (electric, gas, water, phone, and internet).
The great thing about Round Two is that the period of time you have to use them is very flexible. You are able to pick between an 8-week (2 months) or 24-week (6 months) period. Once you select which window of time works best for you and your business, that will be the period of time that you use for tracking when these funds are used.
3. What do I need to qualify for PPP Round 2?
Does your business have 300 employees or less and have you experienced a 25% decrease in revenues for at least one quarter when you measure comparable quarters from 2019 to 2020? Then you’re on track to qualifying! Here are two points we want to clearly emphasize:
– You will want to use the same method of accounting in both periods of time, whether it’s cash or accrual basis. That consistency is important so when you look for a 25% or greater decrease, you’re comparing apples to apples.
– Only one quarter of 2020 needs to show a 25% or more decline in gross revenues when compared to that same period of time in 2019. You only need to show one of those quarters in order to qualify for the second round of PPP funding.
4. How much PPP assistance do I qualify for?
The amount you qualify for is based on two and a half months of your average monthly payroll cost, which is the same qualifier as the first round. However, if you fall under the industry classifications for accommodations and foodservice businesses, that has a 3.5x average monthly payroll cost maximum amount. It’s a nice boost to help these industries that were hit so hard in the last year.
5. When does the PPP round two application window close?
You have from now until March 31st to apply for this round of funding.
6. Do I have to use the same lender for the second round of funding?
Are you using the same lender for the second round of funding? If so, you may not have the same kind of documentation requirements this time around. For example, the lender is not required to ask you for your 2019 payroll cost again or even for your revenue data. If you are getting a loan of $150k or less, the lender may only need you to attest to that information.
That being said, there are a few early indicator reports suggesting some lending institutions and banks are asking for this information again even though it is not required. There is some benefit in going back to the same lender to keep the process streamlined though it is not required.
7. Are there new ways I can use the PPP funding to support my business?
There are two additional ways the loan can be used in the second round of funding that did not exist in the first:
Funds can be used to pay for damages that were caused to your business as a result of vandalism during the 2020 year.
Funds can be used to cover purchases of COVID-19 protection for your workers, such as PPE equipment. Money that you’re using to spend on this can also be eligible for counting is the 40% “other” bucket of costs mentioned in point 2 above.
8. What are the PPP loan terms for the second round?
This loan has the same terms as the first round meaning the extent to which it is not forgiven is going to be a 1% five-year term. However, that is only on the non-forgiven part of the loan.
It’s worth noting we now have clarity on forgiven PPP money thanks to legislation that passed at the beginning of this year. The expenses that were used and paid for by this forgiven money are still deductible on your taxes meaning any forgivable amounts that you receive are not going to be taxable to you. However, if you do end up with any unforgiven part of this, it’s a 1% five-year term. There was a lot of debate surrounding this topic but the issue has been settled. Woo!
9. Are there any exclusions that could keep me from applying for round 2 of PPP funding?
Even if you do qualify based on the measures mentioned above, there are still a couple of things to note that will exclude you from applying for a Round Two of PPP:
If your business has substantial ties to China (guidance likely forthcoming from the SBA on specifically how they define this),
Or if you have received grants under Section 324 of the Economic Aid Act. This relates to shuttered venues since there was some additional support put in place for venues.
10. How do I get my PPP application filed as quickly as possible?
This round of funding was designed to have an impact on smaller businesses and directly in communities. The first applications that are opening up are starting with community lending institutions and community banks. If you already work with one of those folks, or if you have access to them, they are going to be the best place to reach out to get an application filed this week. The applications will begin to broadly open up for folks in the weeks to follow.
Bonus! What if my taxes for 2020 aren’t done yet? Does that mean I can’t apply for the second round of PPP funding?
For businesses that are incorporated or have strong financial statements to back up their 2020 data, you don’t need a completed 2020 tax return to apply. You can use financial statements as support documentation for your decrease in income.
If you are a cash-basis filer, you may be able to use bank statements as a way to support your income over 2019 and 2020 and show the historic loss in revenue. Having a completed 2020 tax return is not required but will help if any issues with applying arise or if you need to make a stronger case for claiming a larger amount.
For self-employed individuals and Schedule C filers, the tax return preparation process might be helpful if your 2020 average monthly profit over the year was greater than 2019 in whole, even though you may have suffered a quarter of loss. In this case, we recommend trying to complete your 2020 tax return prior to applying or at least having the tax return started and in draft status.
Have more questions surrounding the 2nd round of PPP loans? Drop them in the comments below or feel free to reach out to us directly at email@example.com. This is a complicated process and we are here to help make heads and tails of this situation with you.