Paycheck Protection Program (PPP) Reopened
The new stimulus bill legislation was recently signed into law and provides several important changes to previously issued COVID-19 relief programs:
Over $284B available for new loans
$15B in funding for live venues
$20B for New Economic Injury Disaster Loan grants for businesses in low-income communities
Limited Eligibility for Second Round PPP Loans
Available to first-time qualified borrowers
Available to borrowers that previously received a PPP loan
Second-time borrowers must have 300 or fewer employees
Maximum Loan Amount
The maximum loan amount in the second round is $2 million. Borrowers have an option to calculate the maximum loan amount by multiplying the borrower's average total monthly payroll by 2.5x. One of the following must be used when calculating the maximum loan amount:
Maximum Loan Amounts for the Hospitality Industry
Borrowers that have NAICS Code 72 (typically restaurants and hotels) are permitted to use a 3.5x multiplier of their average monthly payroll costs to calculate their maximum loan amount, subject to the $2 million cap.
Use of PPP Funds
Congress expanded the types of expenses for which PPP loans can be used, which applies to existing PPP loans (except in the event forgiveness has already been obtained) and new loans. In addition to payroll, rent, covered mortgage interest and utilities, the PPP now allows proceeds to be used for:
Covered Operations Expenditures
Covered Property Damage Costs
Covered Supplier Costs
Covered Worker Protection Expenditures
PPP Forgiveness
As a reminder, PPP loans are designed to be 100% forgivable if the proceeds are spent in accordance with program rules. Additional Paycheck Protection Program Round 2 highlights and immediate information can be found in the National Law Review.
How To Apply
Click here for the form required to apply for PPP with an eligible lender. As during the initial round of PPP loans in 2020, the Small Business Administation (SBA) will not accept PPP applications directly from small businesses during the current 2021 round — you must apply through a participating financial institution.
