PPP Loans: Round 2
Updated information on The Coronavirus Response and Relief Supplemental Appropriations Act second round of PPP loans

January 11, 2021

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (the “Act”), signed into law by President Trump on December 27, 2020, provides $284 billion for a second round of Paycheck Protection Program (PPP) loans.

Although details about the Act will likely continue to evolve as they did with the CARES Act, here is the most up-to-date information.

Similar to the first round of PPP, self-employed individuals and small businesses are again eligible for this financing if they use at least 60% of loan proceeds to cover payroll expenses. Loans are limited to 2.5 times the monthly payroll expense of the business with an increased limit of 3.5 times the monthly payroll expenses of restaurants and food businesses.

Businesses which were granted PPP loans last year are eligible for this additional loan if they have fewer than 300 employees, experienced a 25% revenue loss in any calendar quarter of 2020 and can demonstrate that the amount of the initial PPP loan has been or will be used as intended. Note that the requirement about size also applies to first-time borrowers.

Other program enhancements include:

  • Business expenses that can be paid with PPP loan proceeds are expanded to include employee personal protective equipment, facility protective modifications, computing services cost, property damage resulting from public disturbances and payments to essential suppliers.
  • Business expenses paid with both Round 1 and Round 2 loan proceeds are deductible for income tax purposes.
  • There is a simplified forgiveness procedure for both Round 1 and Round 2 loans of less than $150,000.

Additional PPP guidance from the Small Business Administration is expected soon, but businesses which may qualify for a Round 2 PPP loan should check with their bankers now.

GCT is committed to providing the most timely guidance on PPP and other issues facing small businesses.

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