Paycheck Protection Program (PPP) – Round 2

Effective December 27, 2020, the Consolidated Appropriates Act, 2021 (CAA, 2021) was signed into law.   The act contains numerous provisions meant to bolster the economy.  Among these provisions is the funding of an additional round of PPP loans.

Background

The CARES Act established the Paycheck Protection Program (PPP) loan program to give assistance to small businesses during the pandemic.  The funds are meant to encourage businesses to retain and rehire employees.  If certain conditions are met the entire loan could qualify to be forgiven.  The original PPP loan applicant closed in April of 2020.

What Changed?

 CAA 2021 created a second round of PPP loans, commonly referred to as PPP round 2.  The requirements to qualify for the second round are stricter than the first round.  The business must show at least a 25% reduction in gross receipts in any quarter of 2020 as compared to the same quarter of 2019.  The borrower must also certify that current economic uncertainty makes the loan necessary to support the ongoing operations.  To qualify for the second round the borrow must have taken the original PPP loan and used all the funds for qualified expenses.  

CAA 2021 also refunded the original PPP loan.  Meaning that if a business did not take a PPP loan in the past, it can apply for the first loan, if it qualifies.  The qualifications for the first loan are not as strict as the second loan. The borrower must also certify that current economic uncertainty makes the loan necessary to support the ongoing operations.