The second round of PPP loans is here. $284 billion are approved for distribution. The requirements vary if this is your first time as a small business owner to receive a PPP loan or your second. Here are the requirements you need to fulfill for each.

If this is your first time taking PPP Loan, then you need to be met the following requirements:

1. Your business must have 500 or fewer employees.

2. Your business must be in operation prior to February 15, 2020.

3. The loan you apply for is limited to 2.5 times your average monthly payroll cost for the calendar/fiscal year preceding the year of application up to $2 million. For hotels and restaurants, the maximum will be 3.5 times the average monthly payroll cost of up to $2 million.

4. You cannot have a significant operation in China.

5. You can have pre-existing loans / SBA loans and still qualify.

6. Deadline to apply is March 31, 2021.

If you had previously received funds from the first round of PPP loans, then the requirements are different. This is what they look like:

1. You must have spent all funds received during the first round.

2. Your business must have 300 employees.

3. You must show that your business has experienced a 25% decline in revenues in 2020 as compared to 2019.

Which costs are covered by the PPP Loan?

PPP loans are designed to cover payroll costs, including salary, wages, retirement contributions, vacation, and sick leave, family leave, and group health premiums. There are provisions to cover rent, mortgage interest, utilities, and other interest on debts.

Which costs are not covered by the PPP Loan?

Certain costs are considered excluded payroll such as salary for an employee more than $100,000, the employer’s portion of payroll taxes, the salary of an employee who lives outside the United States, qualified sick leave for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act.

Rules for spending:

1. You must spend at least 60% of the received funds on payroll over a period of 8 to 24 weeks to be eligible for full loan forgiveness.

2. Must guarantee payroll first for a minimum of 8 weeks before using the funds for other expenses.

3. You will not qualify for loan forgiveness if you laid off employees.
The loan will be subject to forgiveness if the borrower follows the guidelines of the CARES Act.

If you need further information or need help getting your documents together and applying, please contact us and we will schedule a 30-minute free consultation call where we discuss your needs and how we can help you address them.