Payroll Protection Program: PPP Second Round Updates and Qualifications

January 15, 2021

PPP Eligibility Requirements for Borrowers to Receive a 2nd PPP Loan

Pursuant to Sec. 311, PPP Second Draw Loans, previous PPP loan borrowers can apply for an additional loan of up to $2 million, if they meet the following requirements:
• Have 300 or fewer employees
• Have used or will use all of the proceeds from their first PPP loan
• Had a 25% or greater reduction of “gross receipts” when comparing any quarter in 2020 to the same quarter in 2019
In addition, the following stipulations apply to this round of PPP loans:
• The PPP-2 loans cannot exceed $2 million
• The loan is based on 2.5 x average monthly payroll costs in 1-year prior to loan or calendar year 2019
• For Borrowers with NAICS codes starting with 72 (i.e., hotels and restaurants), the loan is based on 3.5 x average monthly payroll costs

Similar to the first round of PPP loans, eligible spending must be comprised of at least 60% on payroll costs (compensation, health, retirement and state and local payroll taxes) over a Covered Period of either 8 or 24 weeks. See below for additional eligible costs.
• New PPP loans will be available through March 31, 2021
• Borrowers of Initial PPP Loans May Be Eligible for Additional Funding
Pursuant to Sec. 312, Increased Ability for PPP Borrowers to Request an Increase in Loan Amount due to Updated Regulations, Borrowers are eligible to apply for additional PPP funding.
The SBA has 17 days after the enactment of this Relief Act to issue guidance
Eligible Borrowers who returned all or part of their original PPP loans may reapply for an amount equal to the difference between the amount retained and the maximum allowable amount
Eligible Borrowers who did not accept the full amount of the PPP loan for which they were eligible, may request a modification to increase the PPP loan to the maximum amount permitted