The U.S. Small Business Administration (SBA) and Treasury recently issued guidance for the round 2 Paycheck Protection Program (PPP-2), also called the second draw program.
The loan portals are expected to be open shortly, and the loan application process closes on March 31, 2021. The Interim Final Rule ( IFR ) provides guidance on the restored program and answers questions regarding the Economic Aid Act provisions signed into law as part of the Consolidated Appropriations Act of 2021.
Eligible borrowers must have experienced a 25% revenue reduction in 2020 vs 2019. This can be assessed on a quarterly or annual basis.
Loan calculations are based on 2.5x average monthly payroll, and are not to exceed $2 million.
Borrowers that have a NAICS code the begins with a 72 can use 3.5x the computed average monthly payroll, which is not to exceed $2 million . NAICS Code 72xxxx includes restaurants, accommodations and sleepaway camps.
The maximum loan size is $2 million ($4 million aggregate maximum for borrowers considered a single corporate group).
Can use 2019, 2020 or 12 months prior to application for payroll costs.
Qualified seasonal borrowers can utilize any 12 week period between February 15th, 2019 and February 15th , 2020 for payroll costs.
Borrowers must have previously received a first draw PPP loan, and must have used or will use full amount of first draw loan prior to expected date of the second draw loan disbursement.
The Economic Aid Act generally provides that a borrower is eligible for a Second Draw PPP Loan only if it has 300 or fewer employees.
As with PPP-1, amounts properly used for payroll and other defined costs are eligible for loan forgiveness.
These are only the key details; there are other eligibility and calculation requirements. Your DDK Tax Advisor and the DDK PPP Team is here to assist you with further guidance.
