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Guess What's Back? Back Again. PPP is Back. Tell a Friend.

  • In December's stimulus, Congress earmarked money for a second round of PPP loans.

  • You can qualify if you are did not take a PPP loan the first time around, or if you are a second drawer. But there are different qualifications for each.

  • Contact your lender to find out how to apply - but be quick. The deadline is March 31.



Last summer, when the pandemic and shutdowns were just getting started, Congress helped small businesses by funding Paycheck Protection Program (“PPP”) loans. As you likely know, these loans were made to businesses to help them make payroll for a couple of months. And, assuming that money was used for payroll protection, these loans were forgivable. They really were a big help to many businesses.


Well, in the stimulus bill that passed back in December, Congress earmarked money for another round of PPP loans. And the Small Business Association (who issues the loans) has announced it is issuing them beginning January 13. As a result, lenders are now accepting applications. So who is this second round (or third, depending on how you count) for? Who can apply? For what expenses? And how much is available? Those are the questions we address in this blog entry.


Who Qualifies


Congress earmarked $284 billion for new PPP loans in the latest stimulus. In the bill, it attempted to correct some of the mistakes in the previous bill.


Under the new bill, funding is available to both new PPP borrowers and ones who received a PPP loan the first time. But there are some restrictions on who can apply. The SBA has divided the pool into the two groups – first time borrowers and second draw borrowers.


The following types of businesses are eligible to be first time borrowers:


  • Sole proprietors, independent contractors, and self-employed persons;

  • Any small business concern that meets SBA’s size standards; or

  • A company or non-profit organization with fewer than 500 employees (there are some exceptions for businesses in certain industries like food services where they can have more than 500 employees).


A first time borrower must have been in business on February 15, 2020 and it must certify that the “current economic uncertainty makes this loan request necessary” to support its continuing operations.


The qualifications are stricter for a second draw applicant. It must:


  • Have previously received a first draw PPP loan and used or will use the full amount only for authorized uses;

  • Have no more than 300 employees; and

  • Show at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.


How Much is Available?


If a business qualifies under one of these two scenarios, it is eligible for a first or second PPP loan. Again, the loans are to be used for payroll related expenses.


A first time borrower is eligible for 2.5 times its monthly payroll cost up to $10 million. It will, obviously, be required to show what its monthly payroll cost is. A second draw borrower can also receive 2.5 times its monthly payroll cost, but the cap is $2 million. There is an exception to this for a borrower in the Accommodation and Food Services sector – that business can receive up to 3.5 times its monthly payroll costs up to $2 million.


How to Get the PPP Loan


As with the previous loan, if your business wants a PPP loan, you need to apply through an approved participating community financial institution. It’s best to start with your bank and ask them if they issue these loans. If not, they will likely have a recommendation. Or, if you prefer, I have a great referral if you give me a call.


It is important, however, to take quick action. The deadline for applications is March 31. So make sure you get your application in before that.


Finally, if you are approved and use the funds for approved expenses, these loans are again forgivable.


Those of you who received these loans the first time around know what a lifeline they were during difficult times. The fact that they are back is a big boost to small businesses. If you have any questions or need any help or a referral, please do not hesitate to give me a call at 512-614-0335. But of course, you can always do this process Without Me.


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