Paycheck Protection Program (PPP) Application FAQs
DISCLAIMER: Always check with your legal or accounting advisor for a final determination on any of these questions/issues.
The PPP Program for both 1st and 2nd round loans resumed on January 11, 2021, and the SBA began accepting applications on January 13, 2021. The application process is open until March 31st, or when the funds are used up.
The rules for the Second Draw PPP can be found here
Call your bank and/or check your bank's website and online portal to verify whether they are accepting applications at this time. Online lenders are also accepting applications at this time.
Check with smaller banks and credit unions in your area. There are also online brokers, like Quickbooks, Paypal, and kabbage.com, that businesses have used successfully to apply.
You are allowed to apply for the PPP Round 2 loan if you can certify that you have used, or will use, all of the original PPP Loan funds on qualified expenses prior to receiving the 2nd Round funds. Actual forgiveness is not required to receive a 2nd Round loan.
Unlike the original PPP Loan, where most small businesses qualified, PPP Round 2 does require your business to show a 25% or more decline in gross receipts in any quarter of 2020 when comparted to the same quarter of 2019, or a decline of 25% or more for the entire year of 2020 when compared to 2019.
Yes, absolutely! This is the question we have received most often. To qualify, you have had to show a profit in 2019 OR 2020 and be able to upload as part of the application process a copy of your 2019 OR 2020 Schedule C or a profit and loss statement to your bank. We recommend that if you qualify, you should apply as soon as possible.
If your loan is over $150,000, you must provide proof of the decline in gross receipts to apply.
However, if your loan is $150,000 or less, you do not need to provide proof of the decline in gross receipts until you apply for loan forgiveness. But, some lenders may still request this with the application.
Yes, you can use the exact same numbers and documents you submitted for your first loan, or you can use 2020 numbers and documents, whichever gives you the larger loan.
Yes, if you use your 2019 net income/payroll costs, then your PPP Round 2 loan will be the same amount. This is completely acceptable under the rules of the 2nd Round PPP.
The SBA has stated that no additional documentation will be required if the PPP Round 2 loan will use the same 2019 calendar year figures used in the original PPP loan application, and you are applying with the same lender. (However, there may be some lenders requesting the same data again).
Include the following items in your calculation –
- The amount from line 31 of your 2019 OR 2020 Schedule C (or the net income from a 2020 profit and loss statement if you have not yet filed your 2020 taxes)
- The total payroll reported to the IRS in 2019 OR 2020 for any employees you paid out of your business
- State and local employer taxes you paid on any employee payroll (i.e., state unemployment taxes)
- Health insurance, life, disability, vision, or dental insurance that you paid for your employees (NOT YOURS)
- Retirement contributions made for your employees (NOT YOURS)
Add these amounts together, divide by 12 to calculate your average monthly "payroll", and multiply by 2.5.
- Any payroll to employees (or net income from your business) over $100,000 in 2019 or 2020
- Any social security taxes you paid as an employer
- Any self-employment tax you paid on your net income
- Payments you made to an independent contractor (someone to whom you gave a 1099 for 2019 or 2020)
- Compensation of any employee whose principal place of residence is outside of the United States
No. Any money you withdrew from your S-Corporation during 2019 or 2020 that did not go through salary is not eligible to be used in the calculation of your PPP loan amount.
It is not considered taxable income, even if it is forgiven. Any expenses you use towards forgiveness are tax-deductible on your 2020 business tax return.
Also, it does not need to be included in gross receipts (revenues) when calculating the required 25% decrease from 2019 to 2020 for 2nd round PPP loans.
Yes. We recommend that you apply for unemployment and the PPP as soon as possible. It's not clear how long it will take to be approved for and receive either one.
If you are approved for both, decide which will be more financially beneficial to you. Once you know this, these are your options:
- You can turn down the one that is less beneficial if you haven't received it yet.
- You can receive unemployment until you receive the PPP funds, then "hire yourself back" and stop receiving unemployment. Unemployment should be retroactive, so it could be something you receive for a while before your PPP funding comes through.
- If you receive both, and unemployment is more financially beneficial over the long term, you could pay back the PPP funds immediately.
The government is also offering something called “Mixed Earner Unemployment Compensation”. This provides $100 per week additional benefit to individuals who have at least $5,000 a year in self-employment income but are disqualified from PUA (unemployment for business owners) because they are eligible for regular state unemployment benefits.