The second round of Paycheck Protection Program (PPP) funding is ready to be released.  The Consolidated Appropriations Act of 2021 allocated $284 billion to the PPP program allowing second draws for hardest hit businesses.  It is expected the SBA will begin taking application next week (January 11-15).  Qualifications for a second draw include borrowers that:

  • Have 300 or fewer employees or meet an SBA alternative size standard (restaurants, hotels, etc. with 300 or fewer employees per location)
  • Used or expected to use all of their first PPP loan before the second draw is disbursed
  • Experienced at least a 25% reduction in 2020 quarterly receipts over the same quarter in 2019 (special comparison periods apply if the business was not in operations for all of 2019 ). First round PPP loans and EIDL grants are specifically excluded from gross receipts.


For most taxpayers, the maximum loan amount is calculated similar to the first PPP loan at 2.5 times the average monthly payroll costs or $2 million.  Food and lodging-type businesses calculate the maximum loan at 3.5 times payroll costs.

Several options are available to calculate monthly payroll costs:

  • Calendar year 2019
  • Calendar year 2020
  • Rolling 12 months prior to the date the loan is made


To be eligible for forgiveness, similar to PPP1, proceeds must be used for either payroll or certain non-payroll expenses, but the list of non-payroll expenses has been expanded for PPP2.  Payroll expenses include group health, vision, dental, life, disability insurance, and state employment taxes in addition to salaries and wages (generally there is a $100,000 salary limitation).  For PPP2, the forgivable amount can be comprised of up to 40% of non-payroll expenditures such as rent, utilities, mortgage interest and transportation costs as defined by PPP1 – and also payments for certain business software or cloud computing services, costs related to property damage and vandalism due to the 2020 public disturbances, and costs of certain supplies and expenses to furnish protection and sanitation for workers.   Borrowers can choose a covered period between 8 and 24 weeks to be considered for forgiveness.

Borrowers requesting loans in excess of $150,000 will be required to submit documentation on the 25% revenue decrease with loan applications.  Documentation may include tax forms, quarterly financial statements or even bank statements.  For loans of $150,000 or less, such documentation will be required to be submitted with the forgiveness application.

The deadline to apply for a second PPP draw is March 31, 2021.  Similar to the funding for the prior PPP loans, there is a limit of $284 billion available, so consider submitting application early.  If you need assistance determining if you qualify for a second PPP draw, reach out to us at MWB.  We’re here to help!