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PPP Qualifications

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PPP Qualifications

  • Borrowers have until March 31, 2021 to apply for a second draw PPP loan (PPP2)
  • The maximum loan amount for PPP2 is 2.5x average monthly 2019 or 2020 payroll costs up to $2mm
    • For borrowers in the Accommodation and Food Services sector (must have a NAICS code beginning with 72), the maximum loan amount for PPP2 is 3.5x average monthly 2019 or 2020 payroll costs up to $2mm
    • Borrowers must subtract any compensation paid to an employee in excess of $100,000 on an annualized basis, as prorated for the time period during which the payments are made or the obligation to make payments is incurred
    • Farmers may use gross income as reported on Schedule F (up to $100,000) to determine loan amount
    • Self-employed borrowers (who report on Schedule C) will use net profit (up to $100,000) to determine loan amount

 

  • Must meet ALL of the following to be eligible for PPP2:
    • Previously received a first draw PPP loan and will or has used the full amount only for authorized uses;
    • Has no more than 300 employees; and
    • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
      • Example: you have gross receipts of $50,000 in Q2 2019 and gross receipts of $30,000 in Q2 2020 – you experienced a revenue reduction of 40% between quarters and would be eligible for PPP2 (assuming all other eligibility criteria are met)
      • If you were not in business until Q4 2019, you’d need to demonstrate you had gross receipts during Q1, Q2, Q3 or Q4 of 2020 with at least a 25% reduction compared to Q4 2019  
      • If you were not in business during 2019, but in operation on February 15, 2020, you’d need to demonstrate that you had gross receipts during Q2, Q3 or Q4 of 2020 with at least a 25% reduction compared to Q1 2020

 

The SBA portal will open on Friday, January 15. Please note:

  • Documentation required to substantiate payroll cost calculations is generally the same as the documentation for your first PPP loan
  • No additional documentation to substantiate payroll costs will be required if you (i) used calendar year 2019 figures to determine your first PPP loan amount, (ii) used calendar year 2019 figures to determine your PPP2 loan amount and (iii) you are using the same lender for your first and second PPP loans
    • If your PPP2 loan amount is greater than $150,000 you must also submit documentation adequate to establish that you experienced at least a 25% revenue reduction in 2020 relative to 2019. 
      • Example: annual tax forms (or quarterly financial or bank statements if tax forms are not available)
    • If your PPP2 loan amount is $150,000 or less, documentation at time of application for the revenue reduction is not required, but recommended as this WILL BE REQUIRED on or before the date you apply for loan forgiveness
  • PPP2 loans are eligible for loan forgiveness on the same terms and conditions as your first PPP loan, except that PPP2 loan borrowers with a principal amount of $150,000 or less are required to provide documentation of revenue reduction is such documentation was not provided at time of the loan application

 

Resources:

PPP2 Top Line Overview from SBA

SBA Interim Final Rule for PPP2