Tuesday, April 23, 2024

When Can I Apply For Second Ppp Loan

Don't Miss

How Can I Maximize My Potential Loan Forgiveness

Before you apply for PPP2, watch this! First and Second Draw – Maximize your PPP loan amount!

In addition to using your loan funds on eligible expenses, follow the guidance below to maximize your potential loan forgiveness:

  • Expenses must be either paid or incurred during your chosen covered period. Your covered period starts on the date of loan disbursement and lasts from 8 to 24 weeks.
  • At least 60 percent of the PPP loan proceeds should be spent on payroll expenses and no more than 40 percent of the loan forgiveness amount can be attributable to non-payroll expenses .
  • Retain existing full-time equivalent employee levels and maintain at least 75 percent of existing employee compensation levels through the covered period.

When Will Second Draw Loans Be Available

Second Draw loans are available from January 13, 2021 to May 31, 2021. As of January 19, 2021, the SBA has started accepting applications from all lenders. The easiest way to get a loan is to go through your current lender. But you can also apply through a new PPP loan provider if you werent happy with your first experience.

How The Money Can Be Used

Second-draw funds are forgivable, provided they are spent on covered costs, including:

  • Payroll costs, including paid sick leave and group insurance benefits provided by the employer.

  • Operating costs, including payments for mortgage, rent, utilities, software, and human resources and accounting needs.

  • Property damage sustained during protests and disturbances in 2020, unless covered by insurance.

  • Payments to a supplier covering contracts and purchase orders in effect before taking out the second-draw loan.

  • Personal protective equipment and modification made to meet health and safety requirements.

At least 60% of the total loan amount must be used on payroll expenses to qualify for full loan forgiveness.

Read Also: What Is Interest Rate For Commercial Loan

How Much Money Can You Get

You can qualify for 2.5 times your monthly payroll costs based on either your net profit or gross income during the calculation period.;

In March 2021, the SBA released new guidance allowing the self-employed to choose whether they want to calculate their PPP loans based on net profit or gross income. Previously, calculations were limited to net profit, which limited the funds you could access if youre in the habit of maximizing tax deductions.;

If you have additional employees on your payroll, their payroll can be used to calculate payroll numbers. You cannot include 1099 workers in your payroll calculations, as they are entitled to apply for their own PPP loans.;

Sole Proprietors And Independent Contractors

How to Apply for Your Second PPP Loan

As of March 3, 2021, sole proprietors and independent contractors determine their PPP loan amount using their gross income. If they are not running payroll, the calculation starts with their gross income as reported on line 7 on a 2019 or 2020 Schedule C. Use either this number, or $100,000, whichever is smaller. Divide this number by 12 and multiply by 2.5 to find your PPP loan amount.

If payroll is being run, take line 7 and subtract the payroll costs in lines 14, 19, and 26. Use a maximum of $100,000. Divide this number by 12 and add it to your average monthly payroll expense. Multiply by 2.5 to find your PPP loan amount.

Further reading:Self-Employment, 1099s, and the Paycheck Protection Program

Recommended Reading: What Is Fha And Conventional Loan

Ppp Round 3 General Terms And Conditions

As a refresher, both first- and second-draw PPP loans were subject to the same general terms and conditions as original PPP loans under the CARES Act, including:

  • Loans are 100% guaranteed by the government.
  • No collateral is required.
  • No personal guarantees are required.
  • The interest rate for all loans is 1% and maturity is five years.

Whos Eligible To Apply For New Ppp Loans

The new round of PPP loans will be available to three categories of businesses:;

  • Qualified small businesses that did not receive a PPP loan during the first round of funding
  • Previous PPP loan recipients who need a second loan and meet certain criteria;
  • Previous PPP loan recipients who returned all or part of their original loan and want to apply for additional funding
  • Every business that applies for a PPP loan needs to have been in operation since at least February 15, 2020 to be eligible.;

    First-time PPP borrowers from the following groups are eligible to apply:;

    • Small businesses or nonprofit organizations with 500 or fewer employees that qualify for other SBA 7 loans.
    • Small businesses, 501 veterans organizations, tribal businesses, and small agricultural cooperatives that meet the SBAs size standards.
    • Sole proprietors, independent contractors, and self-employed people.
    • Food services or hospitality businesses that have fewer than 300 employees per physical location.

    Previous PPP loan recipients who meet the following criteria are eligible to apply:

    • Have fewer than 300 employees.
    • Have already used or will use the full amount of their first PPP loan.
    • Can demonstrate a 25% reduction in gross revenue from any quarter in 2020 compared to the same quarter in 2019.

    Previous PPP loan recipients who returned all or part of their loan are also eligible to apply .;

    You May Like: How To Apply Loan In Sss

    Applying For The Ppp Loan For The First Time: Everything You Need To Know

    If youre applying for a PPP loan for the first time, heres what you need to know:;

    To qualify, your business must have been in operation since at least February 15, 2020. You also have to fit into one of the following groups:

    • A small business or nonprofit organization with 500 or fewer employees;
    • A small business, 501 veteran organization, tribal business, or small agricultural cooperative that meets the SBAs size standards
    • A sole proprietor or independent contractor
    • A food services or hospitality business that has fewer than 300 employees per physical location;

    Summary Of Second Draw Ppp Loans

    PPP Round 2: How to Apply for a New PPP Loan (1st and 2nd Draw)

    A “second draw” PPP loan is available only to eligible borrowers that previously received a first draw PPP loan and have used or will use the full amount of the proceeds on or before the expected date of the disbursement of the second draw PPP loan. The principal differences in the eligibility requirements for a second draw PPP loan compared to the requirements for a first draw PPP loan include:

    • The employee-based size requirement has been reduced to 300 employees .
    • The applicant must have experienced a reduction in revenues of at least 25% in at least one quarter of 2020 as compared to the corresponding quarter in 2019.
    • The following additional entities are;not;eligible for a second draw PPP loan:
    • Companies engaged in lobbying activities, including public policy or political strategy research or advocacy .
    • Any entity for which an entity organized under the laws of China or Hong Kong or has significant operations in China or Hong Kong owns or controls 20% or more of the economic interest of the entity or has a member of the board of directors that is a resident of China.
    • Any person or entity required to register under Foreign Agents Registration Act.
  • A borrower may only apply and receive one second draw PPP loan.
  • Please contact the authors of this alert or your Miller Canfield attorney if you have any questions with regard to your eligibility for a first or second draw PPP loan under the Economic Aid Act or the required applications for the loans.

    Also Check: Will Refinancing My Auto Loan Help My Credit

    Where To Apply For Ppp 2nd Draw Loan Online

    February 11, 2021 By: Racheal Hooks

    Small Business Administration , in collaboration with the United States Treasury Department, has opened the Paycheck Protection Program for businesses. In partnership with banks and other small lenders, SBA began accepting applications for Second Draw PPP Loans on January 13, 2021. The process will last until March 31, 2021, and provide access to small lenders and their customers.;

    Congress has passed the new round of economic stimulus package that goes into effect the week of January 11, 2021. This includes $284 billion in relief financing for small businesses, available through the Paycheck Protection Program .;

    To ensure smaller lenders, and their customers, access this loan, SBA is initially only accepting Second Draw PPP Loan applications from community financial institutions . These institutions are made up of Minority Depository Institutions , Community Development Financial Institutions , Microloan Intermediaries, and Certified Development Companies . Businesses that need help, after taking out an initial loan, will be able to apply for a second loan. Still, participating businesses must show proof of substantial revenue decline and meet other requirements detailed below.;

    How Can You Apply For Ppp If Youre Self

    You can apply for PPP via any lender participating in PPP whether or not they are your primary bank. Online applications make it easy and accessible, in addition to limiting exposure with an in-person application. To apply for a PPP loan online, youll need to calculate your payroll costs and gather the required documentation to complete the application successfully.;

    For full instructions for how to apply online, consult our Step-by-Step Guide to Applying for a PPP loan.;

    Also Check: Who Can Qualify For An Fha Loan

    Some Lenders Still Have Different Rules Around Ppp

    Many nonbank lenders and smaller fintech firms kept their application portals open and intended to do so through the program’s expiration date, while many larger banks had stopped taking new applicants to finish everything in time.

    Now, those banks are reopening their windows to help some borrowers, yet some banks are following different rules.

    This is definitely a win for the smallest of small businesses.Alex CohenCEO at Liberty SBF

    For example, JP Morgan will resume taking applications for PPP loans and will update its loan calculation formula for sole proprietors or so-called Schedule C filers. The new application with the updated formula should be available for borrowers next week, a spokeswoman confirmed.

    Previously, the bank only allowed sole proprietors to use net profit instead of gross income to calculate loan amounts, which will likely resulted in less money.

    Wells Fargo and Bank of America have been offering the new loan calculation formula for sole proprietors. In addition, both banks confirmed they will reopen applications for PPP due to the extension.

    Requesting An Increase Of Your Initial Ppp Loan Amount

    Should My Business Apply for a Second PPP Loan?

    Who can request an increase?

  • If you returned all of your initial PPP loan, you can;reapply;for a PPP loan.
  • If you returned a portion of your PPP loan, you can;reapply for that portion .
  • If you didnt accept the full amount of your PPP loan, you may;request an increase;up to the amount previously approved. Connect with your lender on this request.
  • Seasonal employers who received a PPP loan before Dec. 27, 2020, may request an increase;if a higher maximum loan would be calculated;under the new rules .;
  • You must submit your request by May 31, 2021 using Form 2483. Approvals are subject to the;availability of funds. If you already applied for and received forgiveness of your PPP loan, you cant request an increase. Applying for a second draw loan may be an option. ;

    Farmers and ranchers

    If youre a farmer or rancher who received a PPP loan before Dec. 27, 2020, you can request a recalculation of your loan amount based on the new gross income formula. This formula is:;

    2019;or 2020;Schedule F gross income x 2.5 = Maximum loan amount;

    If you have employees, you can include their wages;and employer-paid benefits, and retirement benefits;in your loan amount calculation. However, the gross income on line 9 must be reduced by those expenses and certain other sales.;

    If;this calculation;results;in a bigger loan, you may receive an increase.;;


    What if I received an EIDL Advance?

    Originally published 1/8/2021. Updated 3/31/2021.

    Read Also: Is Federal Student Loan Forgiveness Real

    Who Can Qualify For A Self

    To qualify for a PPP loan, self-employed individuals must meet the following criteria:;

    • You were in operation as of February 15, 2020
    • You are an independent contractor, sole proprietor, or other qualifying business classification with self-employment income
    • In 2020, you filed a Schedule C or Form 1040
    • Your primary place of residence is the United States
    • You meet other program requirements;

    Short History Of Ppp Funding

    The Paycheck Protection Program loan program was created by the;CARES Act;with $349 billion in funding. Those funds, which were expected to last until the end of June 2020, ran out on April 16.

    With some tweaks to the allocation process to provide more money to struggling small businesses, the second round of $320 billion lasted until Aug. 8, 2020, after which new PPP loan applications were no longer accepted until now.

    The $284 billion allocated in Round 3 will be made available through May 31, 2021, or until funds are expended. This funding round expands on the original PPP goals and guidelines even more than Round 2. The table below shows PPP funding to date.

    ;May 31, 2021

    Round 3 PPP funding contained in the CAA, includes significant changes to the Paycheck Protection Program Flexibility Act of 2020, which also made significant changes to the original Paycheck Protection Program that was part of the CARES Act.

    The new legislation, for example, expands permissible uses of PPP funds beyond payroll, covered utilities, and covered rent. It provides flexibility in choosing the covered period for your loan , and simplifies the forgiveness process for loans of $150,000 or less.

    Recommended Reading: Who Can Loan Me Money

    How Much Can A Self

    The maximum amount for a PPP loan is 2.5 times your average monthly payroll costs. Income listed on a Schedule C in your personal tax return is the only payroll that can be used to calculate your PPP loan amount. If youve hired 1099 workers, they cannot be included in your PPP loan calculation and may apply for their own PPP loans.;

    Simplified Loan Forgiveness Application

    Can I get a Second PPP loan? [FREE CALCULATOR]

    Under PPP2, youre eligible for full loan forgiveness as long as you spend at least 60% of your loan amount on payroll costs. To be eligible for forgiveness, you have to spend the funds over a covered period of your choosing: between eight and 24 weeks after the loans origination.;

    Another change is that youre no longer required to deduct your EIDL advance grant money from your PPP loan forgiveness amount, which was a rule during the first round of PPP loans.;

    The new legislation also streamlines the forgiveness application for loans of $150,000 or less. To apply for forgiveness if you receive a loan of $150,000 or less, you have to submit a one-page application to your lender that includes:;

    • A description of the number of employees you were able to retain as a result of the loan
    • The estimated total amount of the loan spent on payroll costs
    • The total loan amount

    The SBA has to create a simplified application form within 24 days of the bills enactment, and wont require any other materials from business owners unless theyre necessary to verify a businesss revenue loss.;

    Read Also: How To Apply For Direct Loan

    Are Online Businesses Eligible For The Ppp Loan

    The Second-draw loans are open to businesses, some nonprofits, veterans organizations, self-employed persons, independent contractors, housing cooperatives, sole proprietors, small agricultural cooperatives, and tribal or minority businesses. Online businesses that fall within these categories may also be eligible. Please reach out to your PPP lender to find out if your online business qualifies.

    Loan Amount Calculation Without Employees

    Start with your gross income from your 2019 or 2020 Schedule C. This amount is reported on line 7. Put this amount in box A.

    In box B, divide this value by 12. If the value is greater than $8,333.33, you must use $8,333.33. Multiply box B by 2.5 and use that value to fill box C. This will be your PPP loan amount.

    Businesses in the restaurant and bar industry can multiply box B by 3.5 to get their PPP loan amount. These businesses must have a NAICS code that begins with 72.

    Don’t Miss: What Is The Lowest Car Loan Rate

    Youre Our First Priorityevery Time

    We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.

    So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.

    A Guide To Applying For Ppp Loan Forgiveness

    How to Start Your PPP Loan Application at Essential FCU

    WASHINGTON, DC — Flanked by Vice President Kamala Harris and SBA Administrator Isabella … Casillas Guzman , President Joe Biden signs the Paycheck Protection Program extension in the Oval Office of the White House on March 30, 2021. The extension will push the deadline for Paycheck Protection Program loans from March 31 to May 31.

    As the second round of the Paycheck Protection Program winds down on May 31, small business borrowers who have already secured their funding and spent their loan proceeds on covered expenses will soon be applying for loan forgiveness.

    After all, the beauty of the PPP is that it was designed to keep Americans working by having their companies continue to pay their salaries. The program reimburses struggling small businessesultimately enabling them to surviveby allowing them to apply for forgiveness of the PPP loans they used to keep employees on payroll and certain other expenses.

    Before applying, it is important to know the terms of forgiveness for both PPP Draw 1 and PPP Draw 2 loans.

    First Draw PPP Loan forgiveness terms

    First Draw PPP loans are made to eligible borrowers who qualify for full loan forgiveness if they have done the following during the 8- to 24-week period following their PPP loan disbursement:

    ·;;;;;;;;Maintained employee staffing and compensation levels

    ·;;;;;;;;Spent the loan proceeds on payroll costs and other eligible expenses; and

    ·;;;;;;;;Used at least 60% of the loan for covering payroll costs

    Recommended Reading: Which Credit Union Is Best For Home Loan

    More articles

    Popular Articles