This information is accurate as of February 5th, 2021.

The Consolidated Appropriations Act, 2021 was signed on December 27, 2020, which included provisions to the Paycheck Protection Program for second time borrowers.

For businesses that took advantage of the PPP loans in 2020, the opportunity to apply has opened for 2021. Information regarding PPP2 second time borrowers is below:

Downloadable Documents

Qualifications to Apply

  • Businesses who generally have 300 or fewer employees and are eligible for other SBA 7(a) loans
  • Businesses who received a First Draw PPP Loan
  • Has used or will use the full amount of the First Draw PPP Loan on eligible expenses
  • Borrower has experienced annual gross revenue reduction of 25% or greater in 2020 relative to 2019
    • Based on a calendar quarter (not a 3 month period or fiscal quarter)
    • If a borrower was in operation for all 4 quarters of 2019 and 2020, they can compare total annual receipts of 2020 to 2019 rather than quarter-by-quarter comparison
    • Gross revenue includes all revenue in whatever form received or accrued (based on the entity’s accounting method – be sure to be consistent in methodology between periods) from whatever source including:
      • Sales of products or services
      • Interest/dividends
      • Rents
      • Royalties
      • Fees
      • Commissions
      • Reduced by returns and allowances
    • Note: if forgiveness amount of First Draw PPP Loan or EIDL Advance are recorded in calendar year 2020 revenue, they are excluded from the gross receipts comparison.

Ineligible Businesses (Businesses Not Qualified to Apply for PPP Funds)

  • Household Employers
  • Businesses who received a grant under the Shuttered Venue Operator Grant program
  • Businesses not in operation at February 15, 2020
  • Businesses currently in bankruptcy
  • Businesses who have closed permanently
  • Businesses ineligible for original CARES Act First Draw PPP Loan

Documentation to Help Fill Out Application

  • Payroll records
  • Payroll tax filings (form 941, etc.)
  • 1099-MISC
  • Schedule C/F – Sole Proprietor
  • Bank records
  • No additional documentation to substantiate payroll costs will be required if
    • Used calendar year 2019 figures to determine its First Draw and Second Draw loan amount and
    • The lender is the same

Periods Eligible for Payroll Calculation

  • Fiscal year 2019
  • Fiscal year 2020
  • 1 year prior to application date

Payroll Calculation for Loan

  • 2.5 x average monthly payroll costs for the eligible period (selected above) up to $2M
  • 3.5 x average monthly payroll costs for the eligible period (selected above) up to $2M for Accommodation and Food Services companies

PPP2 Loan Terms

  • 100% guaranteed under SBA
  • Interest rate of 1% on unforgiven portion of loan
  • 5 year maturity on unforgiven portion of loan
  • Forgiveness application is due no later than 10 months after the covered period (between 8 and 24 weeks after funds received) ends or loan payments commence

Costs eligible for PPP forgiveness:

  • Same as PPP1:
    • Payroll (clarified to include group life, disability, vision or dental insurance)
    • Rent, covered mortgage interest and utilities
  • New eligible costs:
    • PPE & facility modification expenditures to comply with health and safety guidelines
    • Expenditures to suppliers that are essential to support current operations
    • Operating costs – software, cloud computing services, accounting needs
    • Property damage costs related to 2020 public disturbances that were not covered by insurance or other compensation
    • Applies to PPP1 loans also if forgiveness has not yet been processed
  • 60/40 split requirement between payroll and non-payroll costs continues

Other Information

  • Independent contractors do not count as employees
  • Partners of a partnership cannot apply for their own PPP loans using business name/information
  • No funds can be used for lobbying
  • While the SBA does not require forgiveness to have been applied for on PPP1 loans, some banks may require this to accept your application for PPP2 loans

EIDL advances

SBA Procedural Notice 5000-20075 – For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date. PPP lenders are not required to request remittance of the reconciliation payment.

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The information contained in the Knowledge Center is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will CST or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Knowledge Center or for any consequential, special or similar damages, even if advised of the possibility of such damages.