The U.S. Treasury and Small Business Administration (SBA) reopened the application process for the Paycheck Protection Program (PPP) First and Second Draws on January 11 and 13, 2021. In the first week of resuming the program the SBA approved over 60,000 loan applicationsâ€”amounting to over $5 billionâ€”which were submitted as part of the second round of the PPP. According to recent SBA guidance, at least $25 billion has also been reserved in the Second Draw for â€œeligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods.â€ Certain eligible second-time borrowers will be allowed to mirror the general loan terms of their First Draw onto their Second Draw PPP Loan.
If youâ€™re a first-time potential borrower in the PPP, read the SBAâ€™s guidance here.
Information for second-time qualified borrowers is provided here.
REDW Senior Tax Manager Craig Neumann is available for any PPP-related questions or professional advice.
As disclosed in the guidance, Second Draw PPP Loan qualified usage can provide for employee benefits, in addition to payroll costs, as well as COVID-19-related worker protection costs, mortgage interest, rent, utilities, operational expenses, limited supplier costs, and uninsured damage costs brought on by property defacement and theft in 2020. Qualified borrowers of a Second Draw may generally remain eligible if they plan to or have used up their First Draw for legitimate uses, have 300 or fewer employees, and can illustrate a 25% reduction in gross receipts between similar quarters in 2019 and 2020.
While the second-round PPP application window will be open until March 31, 2021, action should be taken before funding runs out, as was seen in the first two weeks of the programâ€™s initial round last April.
Small businesses that meet the lending requirements for either the First Draw or the Second Draw of PPP loans should consult with a lender to coordinate the submission of the application form as soon as possible.
REDW advisors are here to help you navigate the second round of PPP. Please contact Senior Tax Managers Craig Neumann or Brandon Remley for any PPP-related questions or for professional advisement on your application.
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