Paycheck Protection Program (PPP) Round 2

In this second round of PPP funding, known as “PPP2,” borrowers who already received a PPP loan can apply for a second-draw loan up to $2 million (based on the amount of their payroll) if they meet certain requirements (reduced from a limit of $10 million for first-time PPP borrowers).

To be eligible for a second-draw PPP loan, an applicant must meet ALL the following requirements:

• Has 300 or fewer employees (or 300 or fewer per location for eligible businesses in the accommodation and food services industry)
• Has used the full amount of the funds from their first PPP loan before receiving funds from the PPP2 loan
• Experienced a 25% decline in gross revenue during any quarter in 2020 (compared with the same quarter in 2019), or had overall revenue in 2020 reduced by at least 25% compared to 2019
• Is not a debtor in a bankruptcy proceeding at the time of the application or at any time prior to receiving the funds
• We require PPP2 loan applicants to have a business checking account with Bank of the Sierra.

PPP2 will also allow new first-time borrowers, including:

• Companies with 500 employees or fewer, even if they are eligible for other SBA 7(a) loans
• Sole proprietors, independent contractors, and self-employed individuals
• Not-for-profit organizations including churches
• Eligible businesses in the accommodation and food services industry with 500 or fewer employees per location

The PPP will continue to emphasize each borrower’s payroll expenses. Both the formula to calculate loan amounts (based on average monthly payroll) and loan forgiveness requirements are staying the same. But there are some important updates:

• Covered expenses now tax deductible. Learn more about claiming tax deductions for PPP-covered business expenses.
• Simplified forgiveness process for loans up to $150,000. Previously, a streamlined process was available for loans up to $50,000.
• Higher second-draw loans for accommodation and food services businesses. Loan amounts for eligible borrowers in this industry (NAICS 72) can be up to 40% higher than for other second-draw PPP borrowers.
• No forgiveness reduction for borrowers with an EIDL grant. Before, participants who also received an EIDL grant had their loan forgiveness amount reduced by the grant amount.
• More flexible covered period. Instead of using their PPP funds during either an eight- or 24-week covered period, borrowers can choose a covered period that is any amount of time from eight to 24 weeks from when the funds are disbursed.
• Expanded list of eligible expenses. More business expenses can now be paid for with PPP funds (and are eligible for forgiveness). These are primarily expenses related to helping businesses operate during the pandemic. This expanded list does not apply to borrowers who already submitted a loan forgiveness application for their initial PPP loan.

The closing date for PPP Round 2 loan applications is March 31, 2021.

To help expedite the processing of your PPP loan application, we have prepared a checklist to help you gather the documentation that will be needed to process your PPP loan.