The Small Business Administration (SBA) issued PPP loans to help businesses keep their workforce employed during the Coronavirus (COVID-19) pandemic. The SBA stopped issuing PPP loans in August 2020 but resumed issuing PPP loans in January 2021. Initial PPP loan recipients are eligible for a second PPP loan as well. Borrowers who received a PPP loan may be eligible for forgiveness if certain conditions are met.

How can we get a second PPP loan?

Borrowers may obtain a second PPP loan for businesses with 300 or fewer employees and can provide documentation show revenue declines of at least 25% in any quarter or 2020 as compared with quarterly revenue from 2019. Borrowers must have exhausted the initial PPP loan in order to be eligible for disbursement of the second PPP loan.

How long will the PPP remain open?

PPP loan applications opened January 2021. Applications must be filed by March 31, 2021 in order to be considered. However, given loans are disbursed in the order they are received, interested borrowers should apply as soon as possible given the limited nature of funding.

How can PPP loans be spent?

The first round of PPP loans allowed funds to be used for (1) payroll costs, (2) interest costs on mortgage obligations taken before February 15, 2020, (3) rent for lease agreements undertaken before February 15, 2020, and (4) utilities for services that began before February 15, 2020.

The new PPP loans has expanded its uses. These funds may be used for:

  • Supplier costs and investments in facility modifications, including personal protective equipment to operate safely
  • Business software, including cloud services, payroll, and human resources systems to facilitate the service of sales, billing, accounting, inventory, and records and expenses
  • Certain property damage costs related to public disturbances in 2020 that were not otherwise covered by insurance
  • Worker protection expenses necessary to adapt the business to comply with government restrictions, such as drive-through window facilities, ventilation or filtration systems, barriers, and health screening facilities

How can PPP loans be forgiven?

Borrowers wishing to have their loans forgiven must submit a forgiveness application to the SBA. PPP loan forgiveness is subject to the following conditions:

  • 100% of the loan disbursement is spent
  • At least 60% of the funds are used for payroll costs, and no more than 40% are used for the allowable loan uses
  • Staffing and wage levels must be maintained through the end of the Covered Period (pay period in which the loan must be repaid)

Does reducing employees’ hours affect PPP loan forgiveness?

It may, depending on the size of reduction of hours and other factors. Employers must maintain the average number of full time equivalent employees (FTEEs) during the Covered Period as compared to either February 15 through June 30, 2019 or January through February 28, 2020.


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