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The pandemic is nowhere near over, and as new strains of COVID-19 threaten from the United Kingdom and South Africa, small businesses are naturally worried about their future. Thankfully, Congress has approved a $900 billion relief package. $284 billion of that is set aside for the Paycheck Protection Program or PPP.
Whether you received a loan during the first round of PPP or not, your small business may be eligible to apply again. You may also have been eligible during the first round, but perhaps didn’t get a chance to apply or didn’t get the right advice. We’ve pulled together the key facts about the second round of PPP to help make sure your small business gets the support it needs.
When Can I Apply for the PPP?
The program opened up to lenders on the 15th of January and became fully open on the 19th of January 2021. That means that small businesses can apply for a PPP loan right away.
I’ve Already Had a PPP Loan, Can I Apply Again?
Yes, if your small business satisfies any one of these criteria:
- Your annual revenue decreased by 25% in 2020, compared to 2019
- Any quarterly revenue was down by 25% in 2020, compared to the same quarter in 2019
- Your business closed due to a mandatory shut down because of the coronavirus pandemic.
My Business Qualified for the First Draw of PPP, But I Never Received It – Will I Qualify for the Second Draw?
Yes, most likely. If you were eligible for the first draw of PPP, but did not accept, you will be eligible for the second draw of PPP without having to meet the criteria listed above demonstrating revenue loss.
Can I Use the Same Lender As I Did for the First Round of the PPP?
Yes, and if you do, you may have to provide less paperwork than if starting fresh with a new lender.
Do I Have to Prove My Decrease in Revenue?
Yes, but not right away, for most small businesses. If you’re applying for a loan that’s less than $150,000, you won’t need to provide documentation proving this. However, if you want to apply for loan forgiveness, you will need full documentation showing your decreased revenue in detail. When applying for the PPP, you will have to sign to confirm you had the 25-percent decrease in revenue, which you may later have to prove.
Will I Have to Pay My Loan Back in Full?
The U.S. Small Business Administration (SBA) states that as long as employee and compensation levels carry on as per the criteria for the first round of PPP, the loan is spent on payroll and eligible expenses and at least 60 percent spent on payroll, forgiveness may be available for the whole loan. Small businesses can apply for forgiveness once they have used up all the proceeds of the loan. It’s important to note that lenders will expect you to apply for forgiveness within 10 months of the maturity date of the loan or they may start expecting regular payments. Your lender can set you up with relevant forms upon request.
Will I Pay Tax on My PPP Loan?
You won’t pay tax on any forgiven loan amount. The money you received is not taxable income. Additionally, the expenses attributable to being eligible for forgiveness are even tax deductible.
What If I’m a Nonprofit?
Not-for-profit organizations can apply for this second round of PPP loans. Check your eligibility against the following criteria:
- Does your organization receive less than 15 percent of any proceeds from lobbying?
- Does your organization’s lobbying take up less than 15 percent of its activities?
- Did you spend less than $1 million on lobbying during the tax year ending February 2020?
- Do you have 300 employees or fewer?
If you meet these criteria, your nonprofit may be eligible for PPP and you should be able to apply in the normal manner.
I Had Help With an Economic Injury Disaster Loan Advance (EIDL). Am I Still Eligible for PPP?
Yes, and thanks to changes from the SBA, taking an EIDL advance will not reduce the amount of PPP loan eligible for forgiveness. Previously, the amount of PPP loan you could claim forgiveness on went down by the amount of the EIDL advance, if you had taken one. That’s no longer the case, which is peace of mind for many small businesses.
Talk with your lender about how to apply for PPP and make sure your business gets the right help and support. So many small businesses don’t realize this aid is available, so don’t be the one that misses out.