Paycheck Protection Program (PPP) Frequently Asked Questions

Loan Information

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.

Businesses may qualify for a loan up to 2.5 times your average monthly payroll costs including healthcare and retirement benefits.

Who Can Apply

Your business has less than 300 full-time, part-time, or seasonal employees; if you have multiple locations, you may not have more than 300 employees per location.
You are able to demonstrate a revenue reduction of at least 25% in the first, second, or third quarter of 2020 (when compared with the same quarter in 2019).
You have used or will use the full amount of the first-draw PPP.
Your business was operational before February 15, 2020 and remains operational.

Businesses eligible for 2.0 include:

Sole proprietors
Independent contractors
Self-employed individuals
Certain non-profits (the new bill has expanded eligible businesses to include certain 501(c)(6) non-profit organizations)
Seasonal employers; the new bill has clarified the definition of these to be businesses that operate no more than seven months within a year or earn no more than a third of gross receipts within a six-month period
Faith-based organizations that have less than 150 employees
Housing cooperatives that employ less than 300 people

What has changed with PPP 2.0?

Here’s PPP under the Consolidated Appropriations Act, 2021:

$284 billion has been allocated to PPP (including $138 billion of unspent loans from the first round that were reinvested) and the program has been extended to March 31, 2021
PPP 2.0 loans are available for businesses with under 300 employees
Businesses eligible for PPP loans has been expanded
Loan limitations have been expanded for certain businesses
Forgiveness for loans under $150K have a new, simplified one-page application
- While expenses eligible for forgiveness still require a 60/40 split of payroll costs/other eligible expenses, group health insurance benefits are now included in payroll costs (and these entail life insurance, disability benefits, vision, and dental insurance)
Eligible expenses for forgiveness have been expanded (for first-draw loans that have not yet been forgiven and for second-draw loans)
Borrowers are allowed to choose a covered period that is any period of time between eight and 24 weeks
PPP funding includes dedicated set-asides for community lenders (CDFIs and MDIs) and business that operate in low-income areas
A clarification has been made indicating that interest rates on PPP loans are non-compounding and non-adjustable
A clarification has been made indicating that forgiven PPP loans are not taxable and forgiven expenses are tax-deductible

What are the PPP loan maximums and limitations?

Any business that is applying for a second draw will be subject to more stringent limitations. The maximum second PPP loan amount is the lesser of:

2.5 times the average monthly payroll costs and healthcare costs in the year prior to when the loan was received or within the calendar year
3.5 times the average monthly payroll costs and healthcare costs in the year prior to when the loan was received or within the calendar year for any business that is classified under Code 72 by the North American Industry Classification System (NAICS). (This is a list of hospitality and entertainment businesses like restaurants, hotels, and casinos; click the link to get the full list.)
$2 million

I wasn't able to get a first-round PPP loan. Can I try for PPP 2.0?

Yes, as long as you are eligible and can adhere to the terms of the loan. With the creation of the new bill, Congress has set aside allocations for community lenders and institutions that can help smaller businesses, businesses owned by POC. and those who operate in lower-income areas access capital.

A portion of funding is being directed to Community Development Financial Institutions (CDFIs) and Minority Depository Institution (MDIs). These are community lenders who have committed to expanding economic opportunity for underserved people. Not only are portions of the PPP allocated for these lenders, but also outside of PPP funds; $12 billion is being routed to CDFIs and MDIs. This means that even if the community lenders in your area aren’t supporting PPP, they may be offering other loans with federal funds under the Consolidated Appropriations Act, 2021.

How do I know if my revenue reduced by 25%

Check your March 31, 2020 financials, compare YTD net collections to prior year date collections.
Check your June 30, 2020 financials: Subtract 3/31/2020 YTD revenue to determine your revenue for Q2; do the exact same calculations for 2019
Compare the Q2 revenue in 2020 with 2019