Are You or Your Company Eligible for a Second Round PPP Loan?
With the new federal legislation enacted in December, an additional $284.5 billion has been set aside for new forgivable Paycheck Protection Program (PPP) loans. This second round of PPP loans aims to provide continued support to businesses affected by the COVID-19 pandemic. While the basic criteria for first-round PPP loans remain, the new law introduces several additional threshold conditions that applicants must meet.
Basic Criteria and New Threshold Conditions
1. Basic Criteria for a PPP Loan:
The fundamental eligibility requirements for the second round of PPP loans are similar to those of the first round. These include:
- Businesses must have been operational as of February 15, 2020.
- Applicants must have 500 or fewer employees, although certain businesses with multiple locations may qualify if they meet the size standard for their primary industry.
- Borrowers must have used the full amount of their first PPP loan for authorized purposes.
2. New Threshold Conditions:
Under the new law, additional eligibility requirements have been introduced for the second round of PPP loans:
- Revenue Reduction: Applicants must demonstrate at least a 25% reduction in gross receipts in any quarter of 2020 compared to the same quarter in 2019. This is a critical new requirement aimed at ensuring funds are directed to businesses that have experienced significant revenue declines.
- Employee Limit: Businesses must have 300 or fewer employees, a reduction from the previous 500-employee threshold, making the program more targeted towards smaller businesses.
- Loan Amount Cap: The maximum loan amount for the second draw PPP loans is $2 million, down from the $10 million cap in the first round.
Application Process
To apply for the second round of PPP loans, businesses will need to prepare the necessary documentation to demonstrate eligibility, including financial statements showing revenue reduction and payroll records. It’s crucial to ensure all information is accurate and complete to expedite the application process and secure funding.
Assistance and Support
Navigating the new eligibility requirements and application process for the second round of PPP loans can be complex. If you have any questions or need assistance with your application, our experienced attorneys at Gesmer Updegrove LLP, including Joe Laferrera, Aaron Kriss, and Sean Gilligan, are available to help. We can provide guidance on the eligibility criteria, help prepare your documentation, and ensure you maximize your chances of securing a second PPP loan.
The additional funding provided by the second round of PPP loans represents a vital opportunity for businesses to receive further financial support during these challenging times. At Gesmer Updegrove LLP, we are committed to assisting our clients in navigating these new regulations and securing the resources they need to thrive. Please contact us for personalized advice and support.