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PPP-Round 2

On December 27, 2020, the “Consolidated Appropriations Act, 2021” (“CAA”), was signed into law. The CAA modifies and reopens the U.S. Small Business Administration’s Paycheck Protection Program initially created under the CARES Act. The reopened Paycheck Protection Program is available through March 31, 2021 and is available for first and second-time applicants.

  • Generally, PPP loans continue to be available to the same borrowers as the first round, through March 31, 2021 with the following exceptions:
    • Businesses that were not in operation on or prior to February 15, 2020 are ineligible for PPP loans.
    • Publicly traded companies are no longer eligible for PPP loans.
    • Businesses that have received a new grant for shuttered venue operators under the CAA are not eligible for PPP loans.
    • Businesses that are owned by entities organized in or have significant operations in the China or Hong Kong or businesses with a board member who is a resident of China.
    • Any business that has permanently closed (temporary closures or suspended operations may remain eligible).
    • Any business which members of the executive and legislative branches of the United States government, or their spouse, owns or controls 20% of the ownership of the business.
  • The CAA also amended the bankruptcy code to allow bankruptcy courts to permit debtors in Chapter 11 (small business reorganization) cases to obtain PPP loans on an expedited basis.
  • First and second-time PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020, or the year prior to the loan. PPP borrowers with NAICS codes starting with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs on second PPP loans.
  • The maximum loan amount is $10 million for first-time borrowers and $2 million for second-time borrowers.
  • In addition to payroll, rent, utilities and interest on mortgages, the CAA allows for businesses to use PPP proceeds for additional expenses such as personal protective equipment for employees, costs associated with outdoor dining, supplier costs, costs associated with software, cloud computing and other human resources and accounting needs, and property damage costs due to public disturbances that occurred during 2020 that are not covered by insurance.
  • To be eligible for full loan forgiveness, PPP borrowers must spend no less than 60% of the funds on payroll over a covered period of their choice between 8 and 24 weeks.
  • First time PPP loans are available to borrowers that were in operation on February 15, 2020 and fall into one of the following categories:
    • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
    • Sole proprietors, independent contractors, and eligible self-employed individuals.
    • Not-for-profits, including churches.
    • Accommodation and food services operations with NAICS codes starting with 72 that have fewer than 500 employees per physical location.
  • Second PPP loans are available to borrowers if they have:
    • 300 or fewer employees.
    • Used or will use the full amount of their first PPP loan on or before the expected disbursement date for the second PPP loan. The borrower must have spent the full amount of the first PPP loan on eligible expenses.
    • Experienced a revenue reduction of 25% or more in all or part of 2020 compared with all or part of 2019. Proceeds from the initial PPP loan are excluded from the calculation of gross receipts.

For more information, contact John Billiris at