January 15, 2021

PPP Second Draw Loans to Start January 2021

Written by JHM

Second Draw PPP Loan applications are now available for small businesses. As of January 13, 2021, some local banks are accepting applications and regional bank will start accepting them around January 15, 2021. Funding will extend through March 31, 2021, or until it runs out. Lenders will provide necessary forms for each borrower/business as necessary.

Notable changes to eligibility are present for the Second Draw PPP loans vs. round one. The requirements include businesses with 300 or less employees, as well as a $2 million maximum loan (or equal to two and a half months of the borrowers average monthly payroll, if less). The exception to this requirement is for businesses in the restaurant/hospitality industry (NAICS codes starting with 72.) They will be entitled to a loan amount based off three and a half months of payroll.

Qualification guidelines are as follows:

1: The borrower must have received the first round PPP loan and has used, or will use the full amount of the loan on or before the expected date in which the second PPP loan funds will be disbursed.

2: The borrower must have experienced a gross receipts reduction of 25% or greater in at least one quarter of 2020, vs. the same applicable quarter in 2019. Or alternatively, in a provision included in a recent interim final ruling, a borrower that was in operation in all four quarters of 2019 can submit copies of its annual tax forms that show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.

3: The borrower must be an eligible entity type to include businesses, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.

To clarify, gross receipts include all revenue (from multiple sources / in multiple forms) including sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Gross receipts do not include taxes for/paid to a taxing authority such as sales tax.

As always, we remain committed at JHM to doing our best to keep you informed of relief available to you. Our team is always available for further questions and concerns.