Am I eligible?
You are eligible to apply for your first PPP loan in 2021 if:
- Your business was operational before February 15, 2020
- Your business is still open and operational
- You have no more than 500 employees
- If your business has multiple locations, you have no more than 500 employees per location
- Current economic uncertainty has made a PPP loan necessary to sustain your business
You are eligible to apply for your second PPP loan in 2021 if:
- You have used up your first PPP loan
- Your business was operational before February 15, 2020
- Your business is still open and operational
- You have no more than 300 employees
- If your business has multiple locations, you have no more than 300 employees per location
- You can show a 25% or greater reduction in gross revenue. This is shown by:
- comparing annual gross revenue reported on your tax return between 2020 and 2019
- comparing your gross receipts in any quarter in 2020 to the same quarter in 2019
How much can I apply for?
Generally, you are eligible for a loan equal to 2.5 times your average monthly payroll costs up to $2 million. However, if you are in the Accommodation and Food Service sector you are eligible for 3.5 times your average monthly payroll costs up to $2 million.
How do I come up with my average monthly payroll?
Your average monthly payroll costs can be calculated using one of the following:
- the one year period before the loan application
- the calendar year of 2020
- the calendar year of 2019
What if I have a seasonal business?
Seasonal businesses are eligible for loans equal to 2.5 times their average monthly payroll cost. But the average monthly payroll cost can be calculated using any 12-week period between February 15, 2019 and February 15, 2020.
Is my business in the Accommodations and Food Service Sector?
Any business with a NAICS code beginning with 72 is considered to be in the Accommodations and Food Service Sector. You can check your NAICS code here NAICS.com.
What if I own my own business and don’t have payroll?
Sole proprietors and independent contractors are eligible for loans equal to 2.5 times their average monthly net income from 2019 or 2020. Partnerships are eligible for 2.5 times their average monthly distributions.
Will I have to pay the loan back?
First Draw PPP Loans qualify for full forgiveness if during the 8 to 24 week covered period following the loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loans qualify for full forgiveness if during the 8 to 24 week covered period following the loan disbursement:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60 percent of the proceeds are spent on payroll costs
What are eligible expenses?
- Payroll costs
- Rent
- Utilities
- Operations expenditures: Any software, cloud computing, or other human resources and accounting needs.
- Property damage costs: Any costs from damages due to public disturbances occurring in 2020 and not covered by insurance.
- Supplier costs: Any purchase order or order of goods made prior to receiving a PPP loan essential to operations.
- Worker protection expenditures: Any personal protection equipment or property improvements to remain COVID compliant from March 1, 2020 onwards.
When Can I apply?
Now! You can apply for a PPP Loan until March 31, 2021. SBA is currently accepting PPP loan applications from participating lenders.
Where Can I find the Application?
Paycheck Protection Program First Draw Borrower Application Form
Paycheck Protection Program Second Draw Borrower Application Form
By Cathy Wallner
*DISCLAIMER*
- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
