With the COVID-19 pandemic still causing havoc to many businesses across the country, the second round of the Paycheck Protection Program (PPP) is underway. As you may recall, funds quickly ran out during the first round, so it’s important to apply as soon as you can. This second round is aimed at businesses that may have missed out on the first round, but that doesn’t mean you’re necessarily out of luck if you already received PPP funds.
The biggest differences between rounds one and two are that now you must prove you have 300 or fewer employees and you experienced a revenue reduction of 25% or greater in any quarter of 2020 relative to the same quarter of 2019. And, in addition to meeting those criteria, if you received a PPP loan in round one, you must meet two additional criteria to be eligible for round two:
- You must have used — or will use — the full amount of your first PPP loan on or before the expected date the second PPP loan is disbursed.
- You must have used — or will use — the full amount of your first PPP loan on qualifying expenses under PPP-applicable rules.
Another change for this round is that more business types are included, such as news organizations; electric, telephone, and housing cooperatives; 501(c)(6) organizations and 501(c)(19) tax-exempt veterans’ organizations; destination marketing organizations; tribal businesses; certain faith-based organizations; and some hospitals owned by government entities. Most PPP loans are still calculated based on 2.5 times monthly payroll costs, but restaurants, hotels, and live venues that fall under an NAICS code that starts with 72 can apply for 3.5 times monthly payroll costs for this second round.
What It Covers
If your business or organization meets the requirements, you can expect the second round of PPP funding to cover:
- Employee payroll
- Worker protection equipment, including PPE
- Group health insurance expenses
- Rent and/or mortgage payments
- Software or cloud computing updates
- Essential supplier costs
Remember, if you use the loan funds as directed and follow all other program requirements, the loan will be forgiven. Also be aware that the approved PPP funds for round two are set to end on March 31, 2021, so don’t delay in submitting your application.
Your Action Item
At Clear Skies Capital, our goal has always been to provide financial support to businesses that may not qualify for traditional loans. We’re here to help during the pandemic, too. Give us a call at 800-230-9822 to discuss any questions you have before applying for your PPP loan or get started here.