Top Paycheck Protection Program FAQs and Key PPP Updates
Small businesses are looking for answers to their top paycheck protection program FAQs (frequently asked questions). And now that this Second Paycheck Protection Program has already launched, The SBA is trying to provide guidance on the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act.
The PPP Loan Program began it's second round of funding on Monday January 11th via Community Financing Institutions. Applications are being accepted in phases.
This tiered roll-out is designed to serve those hardest hit first, as dictated by the legislation overseeing this new round of PPP.
Key dates for the paycheck protection program (PPP)
- 1Today, Monday, 1/11/21 - 1st Time PPP Loan Applications are accepted for minority owned businesses exclusively, through Community Financial Institutions (CFI's).
- 2This Wednesday, 1/13/21 - 2nd Time PPP Loan Applications are accepted for minority owned businesses exclusively through Community Financial Institutions (CFIs) CFIs are smaller banks, credit unions, CDFI's and basically any other lender with less than $1B in assets.
- 3Sometime after Wednesday, 1/13/21, PPP 1st and 2nd time loan applications will be accepted by most banking institutions. Larger banks will most likely NOT be opening up their application process until later in the week. Consult with your business banker for your bank's timelines.
- 4The PPP Loan Program expires effective March 31, 2021.
The SBA is telling us that loan number generation will NOT be automatic as before – meaning the process may take a bit longer to protect against fraud, please be patient.
Right now, business owners have a lot of questions. In a combined effort with partners in the legislature, professional organizations, legal and accounting practices we are bringing small businesses much needed answers as they become available.
Here, we’ve collected the most common questions business owners want answered about PPP right now, and we’ve written up the answers.
Top Paycheck Protection Program FAQs
FAQ 1: How long will it take for PPP2 to be enacted and go live?
When the Economic Aid Act was passed on December 27th, 2020 the legislation gave SBA 10 days to provide guidance on the contents and execution of the bill. The SBA has released new guidance as recently as Wednesday, January 6th, 2021. We expect the program to go live within a week.
To apply for the second draw of the Paycheck Protection Program we are suggesting that all businesses check in with a participating lender approved by the SBA. Look up a lender by state here.
FAQ 2: How do I measure a 25% decrease in revenue or gross receipts?
Businesses may qualify for a second PPP loan by showing a 25% decrease in revenue. According to the latest Interim Final Rule (IFR) on second draw PPP loans, revenue is captured using gross receipts. The IFR generally defines gross receipts to include all revenue in whatever form received or accrued. It includes gross receipts from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions. Nevertheless, the revenue is reduced by returns and allowances.
A borrower can calculate revenue reduction with gross receipts by taking any one quarter of 2020 and comparing it to the corresponding quarter from 2019. In this case quarter references a calendar quarter rather than a business or fiscal quarter.
FAQ 3: Do I need to apply for forgiveness for the first PPP loan to take a second PPP loan?
No, if you took a PPP loan in the first round of funding, there is no requirement to apply for PPP forgiveness before applying for a second PPP loan. However, the legislation does state that you must have used all funds from the first PPP loan. If not used up, you must show the intend to use those funds before you may apply for a second loan. More SBA guidance on intent to use funds may be coming soon.
FAQ 4: If I am a hotel or restaurant do I automatically qualify for 3.5x payroll?
Yes. The Economic Aid Act has provided for all businesses with a NAICS code starting with 72 to qualify for a loan amount up to 3.5 times payroll. This is one of the most important top paycheck protection program FAQs for the hospitality industry.
First draw businesses with NAICS codes beginning in 72 will qualify if they have no more than a total of 500 employees. Second draw businesses with NAICS codes beginning in 72 are eligible if they employ 300 or less people per location. They must also meet the revenue reduction requirements. Restaurant and hotel locations with a shared parent company that operate as separate legal business entities can apply separately.
FAQ 5: If my company took the maximum 2.5x payroll in the first round, am I still eligible for a second PPP loan?
Yes, you may still be eligible for a second PPP loan. The new Economic Aid Act is focused on supporting hard-hit businesses. You may, therefore, qualify for a second PPP loan (known as a 2nd Draw loan). Eligibility for a second PPP loan is based on proving a decrease in business revenue that is greater than or equal to 25% of the business’s gross receipts.
If you have a question not covered in the above top paycheck protection program FAQs, please let us know. We will try to answer.
Biz2credit is helping small businesses apply for the second draw of PPP. If interested, please click the link below to apply.
Please note: AccuPay is not in any way related to Biz2Credit. We do not receive any benefit for referring their service.