• Candi Hughes

PPP2 - Good stuff to know

You may be wondering about PPP2. How can my business qualify? Do I need to have PPP1 (first round of loans in 2020) forgiven before I can get PPP2? Confused??

The target of PPP2 is small business with 300 employees or less and a few categories of businesses that may have been left out of PPP1.

PPP2 requirements: (if you received PPP1)

  • 25% reduction in gross revenue between comparable quarters in 2019 and 2020. (Annual amounts can also be used.)

  • PPP1 funds have to have been fully used on eligible expenses.

  • You don't need to have forgiveness for PPP1 to get PPP2.

PPP2 loan amount: The good news is the amount of the PPP2 loan is based on a similar average monthly payroll cost calculation you did for the first loan.

  • You can pick the payroll period based on 2019, 2020, or the 12-month period prior to when the loan is made.

  • If the business didn't exist for a full year prior to 2/15/20, you can use an average monthly payroll cost.

  • If you're self employed, you'll need to use your Schedule C from your tax return to determine the amount.

If you think you may qualify, now what? A great place to go is back to the lender who helped you with PPP1. You have an existing relationship with them, and they can guide you through any lender specific requirements.

Lenders can put their own requirements on the PPP2 application process. They may require you to apply for forgiveness of PPP1 or submit documentation before you can apply for PPP2.

PPP1 forgiveness: If you haven't already applied for forgiveness, now is a great time to do it. There is a simplified, 1 page forgiveness application (Form 3508S) for loan amounts under $150,000. You will need to be able to provide the following:

  • PPP1 loan amount and loan number (both the SBA and the lender loan numbers)

  • Number of employees retained and an estimate of the amount spent on payroll

  • Attestation of compliance with the PPP requirements

Keep your documentation! You will need to retain records for at least 3 years, and be ready should your lender or even the SBA request any further information. If can't provide it, it doesn't exist. Your loan forgiveness won't either.

PPP loans are a great resource to help your business through these difficult times. There are lots of details and requirements around the PPP loans. Look to your trusted accounting advisors to help you get ready, apply, and manage the forgiveness process. We can help you maximize your opportunities.

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