A second round of PPP loans are available to help businesses as the pandemic continues on into 2021. While it is important to do your research to understand how these loans work, for many businesses, these offer tremendous help.
In the months between April and August of last year, the Paycheck Protection Program distributed $523 billion in forgivable government-backed loans to over 5.2 million small businesses to help them continue paying their workers through the pandemic’s forced closures and regulations that interrupted their ability to operate as normal.
It has been announced that the program is restarting, after Congress included $284 billion in new funding in the stimulus package it passed in December. The program will give the hardest-hit businesses a chance at a second loan first.
Listed below is what the U.S. Small Business Administration has released on a second round of PPP Loans in 2021:
Second Draw PPP Loans
Eligible businesses may apply for a Second Draw PPP loan.
Notice: Paycheck Protection Program resumed January 11, 2021 at 9am ET
SBA, in consultation with the U.S. Treasury Department, reopened the Paycheck Protection Program (PPP) for First Draw PPP Loans the week of January 11, 2021. SBA began accepting applications for Second Draw PPP Loans on January 13, 2021.
At least $25 billion is being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods.
The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan.
Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
Maximum loan amount and increased assistance for accommodation and food services businesses
For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (use NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.
Who may qualify?
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
-Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses
-Has no more than 300 employees; and
-Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
How and when to apply
You can apply for a Second Draw PPP Loan from January 13, 2021, until March 31, 2021. SBA is currently accepting Second Draw PPP loan applications from participating lenders. Lender Match can help connect you with a lender. You can also view all lenders near you on a map. All Second Draw PPP Loans will have the same terms regardless of lender or borrower.
If you wish to begin preparing your application, you can download the following PPP borrower application form to see the information that will be requested from you when you apply with a lender:
Paycheck Protection Program Second Draw Borrower Application Form (released 01-08-21)
King Financial Services in Dallas
Don’t get lost in the paperwork that comes along with running a business, instead reach out to King Financial Services. Our team of financial professionals understands how overwhelming it can be to you and your staff to keep up with additional tasks and record keeping. This is why we help eliminate the workload that comes with bookkeeping in house by managing all of the additional responsibilities, such as payroll and bookkeeping. Contact us today to learn more about the tax and financial services we offer. Sandra King is an enrolled agent, empowered by The United States Treasury to prepare your personal or business tax filing. While her services are offered nationwide, Sandra King locally serves the greater Dallas-Fort Worth area, including but not limited to Arlington, Bedford, Colleyville, Euless, Fort Worth, Grand Prairie, Hurst, Mansfield, North Richland Hills, and Richland Hills.
King Financial Services Inc
610 S Industrial Blvd. Suite 140
Euless, TX 76040
Phone: (800) 503-1343