2021James S. SifersPaycheck Protection Program

Round Two of the Paycheck Protection Program

This week, round two of the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) opened for application for funding through various financial institutions approved to administer the program.  This second round of funding is part of the recent federal COVID relief bill.

The terms of this second round of PPP funding largely mirror the terms from the first round of PPP, which launched in the Spring of 2020.  PPP funds can be used for payroll costs (including benefits), mortgage interest, rent utilities, worker protection costs related to COVID-19, uninsured property damage caused by looting and/or vandalism during 2020, and various supplier costs and operational expenses.  Payroll costs must meet at least 60% and the remaining qualified expenses must make up the additional 40% for eligibility for complete forgiveness.  The same employee compensation levels remain on this second round.  Specifically, the annualized $100,000 salary cap for forgiveness.

The maximum funding available under this second round of PPP is 2.5 times the average monthly 2019 or 2020 payroll costs, up to $2 million.  For businesses in the Accommodation and Food Services sector, that maximum funding rises to 3.5 times the average monthly 2019 or 2020 payroll costs, also capped at $2 million.

Eligibility for this second round of PPP funding differs from the first round, in that the borrower generally must:

  • Received a First Draw PPP loan and will use, or has used, the full amount of the initial PPP funding on eligible expenses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020 (or has experienced a reduction in annual receipts of 25 percent or greater).

For PPP round two funding over and above $150,000, prospective borrowers must identify the 2020 quarter meeting required minimum 25% gross receipts, identify the reference quarter in 2019, state the gross receipts amounts for both quarters, and provide supporting documentation.  For loan amounts of $150,000 and below, applicants will not need to identify the quarter meeting the gross receipts reduction or provide supporting documentation but may be required to do so in the future and must certify that they meet the 25% gross receipts reduction at the time of application.  Prior to loan forgiveness, or upon the SBA’s request, the borrower must provide documentation that identifies the 2020 quarter meeting this requirement, identifies the 2019 reference quarter, identify the gross receipts for both quarters, and provide supporting documentation.

Please do not hesitate to contact us with any questions.  Should your business require a referral to a qualified financial professional for help in a PPP round two funding application, our offices will be happy to provide that referral.

James S. Sifers


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