What’s Changed in the Second Round of PPP Funding?

 

President Trump signed the $2.3 trillion Consolidated Appropriations Act, 2021, into law on December 27, offering critical help to struggling small businesses. The act provides $284 billion in Paycheck Protection Program (PPP) funding as part of the $900 billion earmarked for COVID-19 stimulus relief.

While the regulations for these second-draw PPP loans may be familiar, lawmakers made substantial changes since the initial program. In addition to offering a second draw of PPP loan funding for eligible businesses, the legislation incorporates a more straightforward one-page forgiveness application for loans of $150,000 or less. It also provides favorable revisions to loan-forgiveness taxation.

The funding also provides, among other things, revisions to employer-related tax provisions, employee-retention tax credit expansion, and additional eligible forgivable expenses.

Apply for the PPP through Revenued here

Keep reading to learn more about what’s changed in the second round of PPP funding and how you can apply.

 

How the New PPP Differs from the Last Round

Small businesses that have been affected by COVID-19 can qualify for forgivable loans if they use them to maintain employee salaries and meet other requirements. The PPP’s initial $522 billion round opened in April 2020 and closed in August 2020. The latest $284.45 billion second round will again be administered by the Small Business Administration (SBA).

 

Here are elements of the program that are different than last time:

Second-Draw Loans

The most notable legislative developments for small businesses are the second-draw PPP loans. Unlike previous PPP funding rounds, companies that previously borrowed and spent money from the program are allowed to take out a second loan called second-draw loans, with some restrictions:

⦁ To be eligible for a second-draw PPP loan, your company must have used or plan to use its initial PPP funds.
⦁ Your small business must show it has experienced a drop of at least 25% in gross receipts during the first three quarters of 2020 compared to the respective quarters in 2019. Companies that weren’t established in 2019 can still receive the loan with a different calculation for demonstrating lost revenue.
⦁ Eligible firms may only receive one second-draw PPP loan.
⦁ Loans are capped at $2 million for first and second-time borrowers, rather than the previous maximum of $10 million.
⦁ Loans are meant to cover two-and-a-half or, for restaurants and food businesses, three-and-a-half months of payroll expenses.
⦁ Eligible businesses can employ a maximum of 300 workers, down from 500 in previous rounds. If a company has more than 300 employees, like restaurants and hotels, they can still be eligible if no more than 300 employees work at a single location.
⦁ Similar to the initial PPP loan rules, funds can be used over 24 weeks to cover rent, mortgage, payroll, and other allowable expenses.
⦁ New restrictions limit the amount of money going to larger firms or publicly traded businesses. Companies owned by venture capitalists, private equity firms, or other large investors could still be eligible.

 

What the PPP Funds Can Be Used For

While the first PPP funding round was mostly limited for use on payroll and business rent, the second draw PPP funding round includes the following additional allowable and forgivable expenses:

Supplier costs—Essential supplier purchase orders, contracts, or orders for goods made before the loan was acquired.
Operations expenditures—Cloud computing, software payments, and other accounting and human resources needs.
Property damage costs—2020 public disturbance property damage expenditures not covered by insurance.
Worker protection expenditures—Adaptive investments and personal protective equipment costs to help you and your company conform to state and federal health and safety guidelines from March 1, 2020, to the end of the pandemic.

The mandate to spend 60% of the loan on payroll expenses to be eligible for full forgiveness also applies to second-draw PPP loans.

 

Simplified Forgiveness Application

The new legislation directs the SBA to streamline the PPP loan forgiveness applications for companies who received less than $150,000 in funding. The one-page application will include loan information and business owner certification that the eligible funds were appropriately used. Additional information and calculations will not be included on the form.

Forgiven PPP loans will not be taxable under the new legislation. This rule applies to existing CARES Act PPP loans and new second draw PPP loans. Before the new law, the IRS had advised business owners that they could not expense their wages and other qualifying costs if they could get their PPP loan forgiven.

How Long Business Owners Have to Apply for the Program

The new bill requires the SBA to compose rules to begin the PPP second round no later than ten days after the bill was signed into law. Once the SBA regulations are issued, the PPP will formally reopen and be available through March 31, 2021.

 

Apply for the Latest Round of PPP Funding with Revenued

We are proud of our more than 300 five-star reviews given to our customer service reps by clients who applied through us for the initial PPP funding rounds. Many of our satisfied customers stated they came to us after initially applying through their banks and getting no response.

At Revenued, we care about helping our clients and work hard to answer your questions and do whatever necessary to make the PPP application process as painless as possible.

Apply for the PPP through Revenued here

We provide you with a five-step online application platform to upload your photo ID, bank statements, and sign documents. Click on our video tutorial to help you through the entire process. Our friendly customer service agents are available during business hours to answer any additional questions that you may think of.

Take the Revenued PPP Survey

Once you apply for your PPP loan funding, we ask you to take a few moments to fill out our PPP Survey. The data we collect from this survey will help our PPP funding team:

  • Improve insight into how your business may have been affected by the COVID-19 shutdown
  • Improve the online PPP application process
  • Determine the PPP’s efficacy at assisting your business and improvements that could be made

Using this information, our customer service reps will be better able to expedite your PPP application to help your firm receive funding as quickly as possible.

To apply for the second round of PPP funding, fill out our simple online application form. For questions about small business funding or to apply for our new Revenued Business Card, please call (855) 943-5363.

 

Sources

Check out the links below for additional PPP updates and information. Be sure to consult with your business attorney, CPA, or a qualified financial advisor prior to making any financial decisions.

Benefits.gov — Coronavirus resources
U.S. Department of the Treasury
Small Business Administration (SBA)

We're working on some pretty cool new pieces of content, including tools that will give you insight into your business finances.

Want to be the first to know when they launch?

Dig Deeper into Business Loans

Do You Need an EIN to Get a Business Bank Account?
Do You Need an EIN to Get a Business Bank Account?

One particular question that many new business owners encounter is the role that a federal Employer Identification Number (EIN) plays in your business checking account. Is this really a necessary step to create a business bank account, and if so, how do you get an EIN?

Guide to Understanding MCA vs. Traditional Bank Loans

Unlike a traditional bank loan, an MCA is best for a business owner who needs access to cash quickly, often to meet a short-term need for capital. The funds are repaid by withholding a percentage of your businesses debit/credit card sales.