Second Round of PPP Funding: Will Your Business Qualify?
On December 27, 2020, late Sunday night, President Trump signed into law the $900 billion COVID-19 relief bill that was passed approximately a week before by Congress. The legislation, the Consolidated Appropriations Act of 2021, calls for direct payments to individuals and funding to other various communities and sectors that have been hit hardest directly by COVID-19.
This blog will specifically examine the second round of Paycheck Protection Program (also known as PPP2) funding administered by the Small Business Association using local banks of potential applicants. First, it will discuss who is eligible to apply for PPP2 funds. Next, it will discuss the loan terms of PPP2 funds in addition to changes that have been made with regards to obtaining funding.
PPP2 loans will be available to first-time qualified borrowers in addition to businesses that previously received a PPP loan. Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they meet the following guidelines:
The business has 300 or fewer employees.
Businesses must have used or will use the full amount of their first PPP loan.
Business can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
PPP2 also provides potential funding to Sec. 501(c)(6) business leagues, such as chambers of commerce, visitors’ bureaus, etc., and destination marketing organizations, provided they have 300 or fewer employees and do not receive more than 15% of receipts from lobbying. The bill allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.
PPP2 will also permit first-time funding to the following entities:
Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
Sole proprietors, independent contractors, and eligible self-employed individuals.
Not-for-profits, including churches.
Accommodation and food services operations with fewer than 300 employees per physical location.
This blog is just a basic overview of the PPP2 legislation. For more details on how eligibility is granted, contact a professional like the ones at The Center for Financial, Legal, and Tax Planning, Inc.