SECOND PPP LOAN: FAST FACTS
To recap: Here is the original requirements for the original PPP loan offered in 2020:
Eligible Applicants**:
Sole proprietorships will need to submit a Schedule C from their tax return filed (or to be filed) showing the net profit from the sole proprietorship.
Independent contractors will need to submit Form 1099-MISC (now 1099-NEC in 2020) in addition to their Schedule C.
Self-employed individuals will need to submit payroll tax filings reported to the Internal Revenue Service.
Sole proprietors and independent contractors are eligible for loans equal to 2.5 times their average monthly net income from 2019 or 2020. The monthly net income is found by dividing the net income as reported on line 31 of a 2019 or 2020 Schedule C by 12.
Partnerships are eligible for 2.5 times their average monthly distributions. Their average monthly distributions is calculated by taking their distributions from their 2019 or 2020 Schedule K-1, multiplying it by 0.9235, then dividing by 12.
60% of the funds must be used on payroll. The remaining 40% can be spend on eligible expenses. Some examples are:
Mortgage interest payments
Rent and lease payments
Utilities
Operations expenditures such as software and accounting needs (like Bench)
Property damage costs due to public disturbances not covered by insurance
Supplier costs such as cost of goods sold
Worker protection expenditures to be COVID compliance
You must follow these requirements in order to have the loan forgiven. If not, the loan is subject to a 1% interest rate over five years.
What’s New?
If you did not receive a PPP loan in 2020, you are eligible to apply for your first PPP loan in 2021.
If you received a PPP loan in 2020, you may be eligible to apply for a second PPP loan if your business suffered a loss in revenue in 2020.
First Time Applicants: You are eligible if the following apply -
Your business was operational before February 15, 2020
Your business is still open and operational
You have no more than 500 employees
If your business has multiple locations, you have no more than 500 employees per location
Second Time Applicants: You are eligible for a second PPP if the following applies -
You have used up your first PPP loan
Your business was operational before February 15, 2020
Your business is still open and operational
You have no more than 300 employees
If your business has multiple locations, you have no more than 300 employees per location
You can show a 25% or greater reduction in gross revenue
Speak to a representative at your bank today if you interested in applying for the loan.
*Does not include all eligible applicants. Refer to the SBA website for all eligible applicants.