Don’t Miss The March 31 PPP2 Application Deadline!
March 2021 ISSUE March 1, 2021Practice Management Financing
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Last year’s $900 billion economic stimulus package, enacted on December 27, 2020, provided another $284 billion to the Small Business Association (SBA) for additional forgivable PPP small business loans. This included $137 billion for “second draw” loans to borrowers who previously received a PPP loan.
In order to ensure funds go to the hardest hit small businesses, eligibility for the second draw (PPP2) loans is limited to employers with 300 or fewer employees that sustained a revenue loss of at least 25% during any calendar quarter of 2020, compared to the same calendar quarter of 2019. Approximately 40% of our clients who received a PPP1 loan qualify for a PPP2 loan under this more stringent criteria. Practices may receive a PPP2 loan of up to 2.5 times their average monthly payroll costs in the year prior to the loan, or in the 2019 calendar year, with a maximum loan amount of $2,000,000.
Eligible expenses that can be paid with these loan proceeds have been expanded to include not only payroll (including group health, life, disability, vision and dental insurance benefits), covered rent, utilities, and mortgage interest as under PPP1, but also covered worker protection (PPE and facility modification expenditures to comply with COVID-19 federal health and safety guidelines), supply expenses essential to maintaining your current operations, and covered operating expenses including software, cloud computing services, and accounting expenses.
On Monday, February 22, 2021, the Biden administration issued new PPP loan guidelines. Beginning on February 24, 2021, practices with fewer than 20 employees were prioritized for PPP loan application processing with the SBA. This period will give small businesses a 14-day exclusive application period through March 9, 2021, allowing lenders to focus on America’s smallest businesses.
You must submit your PPP2 loan through an SBA-approved lender. We recommend you use the same lender as for your original PPP loan in order to receive priority processing. However, the deadline to apply for new PPP loans ends on March 31, 2021, so be sure to file your application before then.
The McGill Advisory content is provided for informational purposes only and does not constitute legal, accounting, or other professional advice.
Copyright © 2021 John K. McGill & Company, Inc.