PPP Loans: Frequently Asked Questions
The second round of PPP loans has arrived in 2021, in an attempt to revitalize small businesses amidst the pandemic. The $900 billion COVID relief stimulus bill provides a tremendous amount of potential assistance for businesses but, in doing so, does not fully describe all of the details with which it holds. This leaves some business owners wondering exactly how they are able to take advantage of what the government is offering and how it all works. We have aggregated some of the most frequently asked questions that we have received from business owners about PPP loans and COVID relief.
How much is available for the second round of PPP loans?
Of the $900 billion stimulus package that Congress passed in December, $285 billion is allocated to PPP loans. Of this, $15 billion is allocated to live venues, theaters, and other in person entertainment businesses that previously were not able to receive PPP loans.
How large of a PPP loan can my business qualify for?
The PPP program includes the following caps:
$10 million total maximum loan amount (aggregate total for First and Second Draws)
$2 million maximum loan amount for Second Draw
$20 million maximum total loan for businesses within a corporate group
When it comes to loan forgiveness, for the First Draw, businesses could get up to 2.5 times their monthly payroll costs potentially forgiven. For the Second Draw, qualifying businesses can receive up to 3.5 times their monthly payroll costs.
When will the PPP extension end?
The 2021 round of PPP will be open until March 31, 2021, or until program funds are exhausted, whichever comes first.
What do I need in order to qualify for a First Draw on a PPP loan?
To qualify for a First Draw, the following criteria must be met:
Your business was operating as of February 15, 2020
You run a small business, nonprofit, or freelance and have associated payroll costs
Your business has sustained economic damage due to the COVID-19 pandemic
You have 500 or fewer employees
You’re a business partner, sole proprietor, independent contractor, or self-employed individual
You have employees for which you pay salaries or hourly wages
How do I qualify for a Second Draw?
If you received a PPP during the first round, but still need additional funding, you are eligible to obtain a Second Draw if the following criteria are met:
Your business has less than 300 employees
You are able to prove quarter over quarter revenue reduction of 25%, compared to 2019
What businesses are NOT eligible for a PPP loan?
As of December 2020, following the new stimulus package, the following businesses are now eligible for a PPP loan in 2021:
New Organizations
Qualifying faith-based organizations
Businesses that receive legal gaming revenue
Housing, telephone, and electric cooperatives
A number of hospitals which are owned by government entities
501(c)(6) organizations and 501(c)(19) tax-exempt veterans’ organizations
Destination marketing organizations
Tribal businesses
PPP and SBA Loans can be extremely beneficial to small businesses during today’s uncertain operating environment, but they can also be very tricky to navigate. Check out our other blogs on PPP loans for more information. If you would like to speak with one of our account executives, we also are able to offer free consultations and if you are interested in getting immediate funding, fill out our simple, free, credit application
