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PPP Part 2: A Second Bite at the Apple

Key Takeaways:

New funds are available to struggling small businesses. All eligible businesses should apply.

Most businesses with less than 300 employees whose revenue is down 25% or more can apply for a forgivable PPP loan.

Businesses can receive a second PPP loan.

Several additional kinds of expenses are now covered under PPP loans.

On December 27th, the President signed a new coronavirus relief bill into law. The bill includes over $284 million in additional PPP loans for small businesses. Businesses that have previously received a PPP loan are eligible to apply for a second loan if they meet the slightly modified criteria.

It is unclear when applications will be available.  All applications must be submitted by March 31st, 2021.   

Quick PPP Recap:  PPP loans are available to employers impacted by COVID-19. The loan program is intended to encourage employers not to terminate employees.  Employers who use PPP funds for certain purposes ā€“ primarily to cover payroll costs ā€“ may have all or part of the loan forgiven, meaning they might not have to repay the loan.  Any portion of a PPP loan that is not forgiven must be repaid. PPP loans have an interest rate of 1% and a term of 5 years.


New Requirements for Loan Eligibility

Some aspects of the PPP loan application process remain unchanged. For example, employers still have 8-24 weeks to use their funds and they must put 60% of the loan towards payroll expenses. However, there are some slight differences in the eligibility requirements and loan amounts for the new round of PPP loans.

Old Rule:

  • Loans are capped at $10 million
  • Applicants must have no more than 500 employees

New Rule:

  • Loans are capped at $2 million
  • Loan amount is determined by multiplying a businessā€™s average monthly payroll costs by 2.5. For businesses in the accommodations and food services industries the factor increases to 3.5.
  • Applicants must have no more than 300 employees
  • Applicants must have seen a 25% drop in revenues between the 4th quarter of 2019 and the 4th quarter of 2020
  • Applicants must have spent the full amount from their first loan before they can apply for a second

Expansion of Covered Expenses

Old Rule: 60% of the PPP loans must be used to cover payroll expenses. The other 40% can be put towards a limited number of other expenses such as mortgage, rent, and utilities.

New Rule: While the 60:40 rule remains the same, there are more eligible non-payroll expenses.

Examples of newly covered costs include:

  • Equipment related to sanitation and-social distancing such as air filtration systems
  • Property damage
  • Technology related to remote work, for example, software

Loan Forgiveness

Old Rule: Businesses that receive loans less than $50,000 are required to provide only a description of how much money was spent on payroll and how many employees the business retained.

New Rule:  Businesses that receive loans up to $150,000 are required to provide only a description of how much money was spent on payroll and how many employees the business retained.

Practical Impact:  If you were confused by the loan forgiveness application the first time around, you are not alone. The good news is that under the new bill, businesses that received up to $150,000 can use a simple forgiveness application and only have to provide a description of expenses.


The new PPP program is not perfect. There are several unanswered questions.  Just like with the original PPP program, the government and banks will make adjustments and provide additional guidance. We will continue to give you practical updates to help navigate the uncertainty.

PPP Part 2: A Second Bite At The Apple
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