The second round of COVID relief funding was approved just before the New Year, and most individuals have already received their second stimulus checks. But if you’re a business owner, getting your second round of funding isn’t quite as easy. You must go through the application process again to receive a new loan through the Paycheck Protection Program. Here’s what you need to know about getting a new PPP loan.
Is It Only for New Borrowers?
There is some misunderstanding among business owners about whether or not the second round of PPP funding is intended solely for those who did not receive funding before. While it is true that the new legislation opens up funding to new business types and has special programs in place to get funding to previously underserved businesses, it is not only for first-time PPP borrowers.
Even if you received a PPP loan in the first round of funding, you can still receive another one, so long as you meet the 3 following requirements:
You do not employ more than 300 people. For businesses with more than one location, you must not have more than 300 employees in any single location. You must be able to demonstrate a loss of 25% of gross receipts. This can be done by comparing any quarter in 2020 to the same quarter of 2019.You must have used the full amount of your first PPP loan before the second loan is distributed.
So long as you meet these requirements, you can apply for a new loan, regardless of whether or not you had one before.
How Much Can You Receive?
The general rule for calculating PPP loan amounts is 2.5 times your average monthly payroll expenses. While we cannot promise that you’ll receive this full amount, this is a good way to estimate how much you’re eligible for. If your business is in the food services or accommodations industry, you can be eligible for up to 3.5 times your average monthly payroll expenses. No loan amount can exceed $2 million.
What Additional Business Types Are Eligible?
As we mentioned previously, this new legislation opens up PPP funding to a few additional business types. This includes the following:
Local newspapers, TV and radio stations, Public broadcasters501(c)(6) nonprofits, Housing cooperatives
Businesses that fall into these categories can now apply for a PPP loan, providing they meet the same eligibility requirements outlined above.
Can Independent Contractors Get a Loan?
As with the first round of PPP funding, independent contractors can apply for PPP loans. Due to the name of the program, some independent contractors and solopreneurs have believed that they can’t receive a loan since they don’t have employees on their payroll. However, you are considered an employee of your own business, and your income is considered a payroll expense. So, provided you meet the other eligibility requirements previously mentioned, you can apply for a new PPP loan.
If you have any questions about your eligibility for a PPP loan or if you require assistance to apply, please reach out to The Accounting Guys. This new legislation only expanded the PPP program through March 31, 2021, so it’s imperative that you apply as soon as possible if you hope to secure funding. Contact us today to schedule your appointment!
Social: The second round of PPP funding is newly available. But will your business be eligible? How much can you receive? Read our latest blog to learn more about getting a second PPP loan.