Page 31 - BusinessWest February 3, 2021

Round 2
PPP Second-draw Loans Come with Strict Eligibility Requirements
OBy Jonathan Cohen-Gorczyca, CPA, and Amila Hadzic
n Dec. 27, 2020, the Economic or two and half months of the busi-
Aid to Hard-Hit Small ness’ average monthly payroll. For
Businesses, Nonprofits, and those who are assigned a NAICS code Venues Act was signed into law to with 72 or are a seasonal employer,
before the loan was made to calculate average monthly payroll. There is also the option to use 2020 wages.
Application and Documentation
In order to apply for this loan, the
SBA Form 2483-SD needs to be com- pleted. Form 941, state quarterly wage unemployment forms for the appli- cable quarter used, and other payroll records may be needed depending on the payroll period used to calculate
PPP
Continued on page 44
assist businesses who have been financially impacted by the COVID- 19 pandemic. As a result of the Economic Aid Act, the Paycheck Protection Program’s second-draw loan program was created.
This program will allow the U.S. Small Business Administration to pro- vide eligible businesses with additional loans, similar to those from the original Paycheck Protection Program (PPP). The last day to apply for the second- draw loan is March 31, 2021, and there are eligibility and documentation requirements that need to be met dur- ing the application process.
Eligibility
This loan can only be made to a business that has received a first-draw PPP loan and has used the full amount
“In order to be eligible for this second-draw PPP loan, the business must have 300 or fewer employees. The business must have also experienced at least a 25% reduction in revenue in 2020 compared to 2019.”
of the loan on eligible expenses before the disbursement of the second loan. A business that was ineligible for the first loan cannot receive the second-draw PPP loan.
In order to be eligible for this second-draw PPP loan, the business must have 300 or fewer employees. The business must have also experienced at least a 25% reduction in revenue in 2020 compared to 2019. The revenue reduction can be calculated by com- paring one quarter in 2019 with the same quarter in 2020. However, if the business was not in operation for the full year in 2019, there are other peri- ods that can be used for this calcula- tion. If an entity was in operation for all four quarters in 2019, then the annual revenue can be compared with 2020.
Loan Amount
The maximum loan amount for the second loan is the lesser of $2 million
the loan amount can be greater than two and a half months. The borrower can use either total wages paid in 2019 or wages paid in a 12-month period
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