On January 15th, the Small Business Administration (SBA) has begun accepting applications for the second round of Paycheck Protection Program (PPP) loans.
To be eligible for a second PPP loan — which cannot exceed $2 million — a business must have 300 employees or fewer, have previously received a First Draw PPP Loan, have used or will soon use all of the money from its previous PPP loan, and can demonstrate a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. Keep in mind that alternative calculations are provided for applicants that were not in business for all of 2019.
For most applicants, the maximum loan amount of a Second Draw PPP Loan is 2.5x the average monthly 2019 or 2020 payroll. For borrowers in the Accommodation/Food Services industry, the maximum loan amount for a Second Draw PPP Loan is 3.5x the average monthly 2019 or 2020 payroll costs. Both always up to $2 million, as previously mentioned.
The applicant must submit documentation able to establish that the applicant experienced a reduction in revenue on a quarter year-over-year basis, at the time of application, on or before the date of the loan forgiveness application, or at SBA’s request. Such documentation may include relevant tax forms, a copy of quarterly income statements or bank statements.
We expect participating lenders to accept applications across various formats and timeframes. Businesses should consider where to apply, evaluate eligibility, and gather the appropriate documentation for the respective applications.
Summit CPAs Professional Services has established a dedicated team that is continuously monitoring new guidance from the SBA, the Treasury, Congress, and the IRS, to ensure we have the latest information when advising our clients. To discuss your eligibility for a Second Draw PPP Loan and/or accurately calculate your borrowing capacity, feel free to contact us. info@summitcpasservices.com