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Do I Qualify for the Paycheck Protection Program (PPP2)?

The second stimulus bill provides a roughly $900 billion COVID-19 economic relief package, delivering long-overdue assistance to businesses and individuals. Within this package, they have allocated $284.5 billion for the second round of Paycheck Protection Program funding, referred to as PPP2. The PPP2 loan will be available to first-time qualified borrowers (referred to as 1st draw) and to businesses that previously received a loan from the first round of PPP funding (referred to as 2nd draw). We have outlined information to help you know if you qualify along with other important details.

When to Apply

There are 2 application forms, one for 1st draw and one for 2nd draw borrowers, which we have included links below.  Both 1st and 2nd draw borrowers have until March 31, to apply. 

1st Draw Borrower Application Link

2nd Draw Borrower Application Link

2nd Draw Borrowers

You must meet the following criteria in order to qualify for the PPP2.

  • Have 300 or fewer employees prior to February 15, 2020 (For businesses with multiple locations, not more than 300 employees per location)
  • Used or will use the full amount of the first round of your PPP loan prior to the receipt of the PPP2 funds
  • 25% gross receipt decline in any one quarter in 2020 compared to the same quarter in 2019 (see gross receipts section below)
    • Important: EIDL, PPP funds, or other grants are not to be included in gross receipts
    • Appears to be based on the calendar quarter (not a 3 month period or fiscal quarter). SBA/Treasury will determine

We’ve created a gross receipt decline worksheet, which can be downloaded from the linked button below.

This worksheet is designed to aid you in determining your eligibility. Please fill out the highlighted portion of this spreadsheet.

Once completed please save the completed Excel spreadsheet and email it as an attachment to [email protected]. We will review the information you’ve provided and will be in touch with you shortly.

2nd Draw Borrowers Loan Amounts

Overall the maximum loan available per business has been capped at $2 million. Businesses can use 2019, 2020, or 12 months prior to your 2nd draw application for payroll costs. Funding per business will be calculated as follows:

  • Funding for Restaurants, Hotels, or other businesses that have NAICS Code starting with 72, will be calculated at 3.5 x average monthly payroll cost.
  • All other businesses and industries will have their funding calculated at 2.5 x average monthly payroll cost.
    • New Businesses: Total payroll divided by the number of months in operation x 2.5
    • Seasonal Businesses: 12-week period Feb 15, 2019- Feb 15, 2020 (Seasonal employers are defined as operating for no more than seven months in a year or earning no more than 1/3 of their receipts in any six months within the calendar year.)
1st Draw Borrowers Eligibility

If you were not eligible to apply for the first round of PPP loans or you are a new business, you are now eligible to apply. 1st draw borrowers needn’t prove 25% gross income decline as do with 2nd draw borrowers.

 

Documentation Requirements

The same documentation is required as the first round of the PPP loans, but if you are a 2nd draw borrower, you must also include documentation of gross income decline. Your lender can assist you with which documents are needed based on your loan amount.

 

Additional Considerations
  • Borrowers who returned all or part of their first PPP loan may reapply for the difference if they have not received forgiveness.
  • Schedule F Farmers and Ranchers may use up gross income instead of net income from either 2019 or 2020, but may only use up to $100,000 of gross income when applying for PPP2.
    • The calculation will be gross income (max of $100k) divided by 12 and multiplied by 2.5
PPP2 Forgiveness

Guidance has been issued by the SBA on the eligibility of forgiveness of the PPP2 loan. The forgiveness requirements are the same as the first PPP round and still remains that 60% of the expenditures have to be from payroll.

 

If you have any questions, please reach out to your MBE CPAs representative or feel free to contact us at [email protected] or (608) 356-7733.

MBE CPAs PPP2 Qualification resource sheet can be downloaded here.