Paycheck Protection Program (PPP) Round 2

Updated 3/31/2021

The Paycheck Protection Program (PPP) application deadline has been extended from March 31 to May 31, 2021.

Based on revised guidance released by the SBA on March 3, 2021, self-employed individuals who file IRS tax Form 1040, Schedule C may calculate their maximum loan amount using GROSS income. Prior to the guidance, the loan amount was based on payroll costs plus net profits. This change is designed to increase the loan amounts for some small business owners. (Please note that borrowers whose PPP loan has already been approved as of the effective date of this guidance cannot increase its PPP loan amount based on the new calculation methodology.) The guidance also removes the eligibility restriction that prevents businesses with owners who have non-financial fraud felony convictions in the last year from obtaining PPP loans, and removes the eligibility restriction that prevents businesses with owners who are delinquent or in default on their Federal student loans from obtaining PPP loans.

At the end of 2020, lawmakers passed the Consolidated Appropriations Act, 2021, with new economic relief measures in response to COVID-19. The new law includes $284.5 billion in added funding for the Paycheck Protection Program.

Along with restarting the PPP, which provides low-interest, forgivable small business loans to eligible borrowers, the legislation updates the program in important ways. Most notably, it now allows certain borrowers to apply for a second PPP loan, in addition to accepting applications from first-time borrowers.

Loans for Returning & First-Time Borrowers

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

Key Updates

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 has been extended to May 31, 2021.

PPP Checklist

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.

Applying for a PPP Loan at Bank of the Sierra

To apply for a first- or second-draw PPP loan, please apply using the link below. You can also check the status of your PPP loan application.

Apply for a PPP Loan

Check Application Status

Banking Beyond the Lobby

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Important Disclaimer: Bank of the Sierra wants to support our business customers by providing information and reminders about the Paycheck Protection Program (PPP), which are based on guidance from the Small Business Administration (SBA). Please note that the information we provide is for informational purposes only. We are not guaranteeing its accuracy. We are not endorsing the program nor providing business, legal, or tax advice. There are still uncertainties about the program, and the SBA is expected to release additional guidance. Current information can be found on the SBA’s Paycheck Protection Program webpage.