The Consolidated Appropriations Act, 2021 (the “CAA”) was signed into law on December 27, 2020. The CAA provides for a second round of Paycheck Protection Program (“PPP”) forgivable loans or commonly referred to as PPP2.  The CAA also provides additional tax deductions and expands the Employee Retention Credit. The SBA published its Interim Final Rules on January 6 (click here to access the IFR rules), implementing the CAA. Like PPP round 1, the SBA will be publishing guidance in the coming days and we’ll post significant updates as they are released.

As of January 13, 2021

To be eligible for PPP2 “second draw loans,” the borrower must:

  • Have 300 or fewer employees; and
  • Have suffered a 25% or higher reduction in gross receipts during any calendar quarter in 2020 compared to the same quarter in 2019; and

To determine the amount of the PPP2 loan, an eligible recipient may receive up to 2.5 times the sum of their average monthly payroll costs (for the larger of 2019 or 2020), but entities assigned to NAICS code 72 (Accommodations and Food Services) may receive up to 3.5 times average monthly payroll.

To apply, you will need access to the following amounts:

  1. Gross Receipts (revenue) by Quarter for each quarter in 2019 and 2020
  2. Annual payroll expenditures for 2019 and 2020 (you’ll need the larger of the two years)
Here is a link to the SBA version of the application document so you can gather the information that will be needed for your bank. PPP Second Draw Borrower Application Form

You may use the same bank or a different bank than your original PPP loan was funded from.  You do not have to have forgiveness completed on the first loan to apply for the second loan.

The CAA also reopens access to the original PPP for businesses who qualified for a loan but did not receive a loan, and also for businesses who returned all or a portion of the loan. For a borrower who returned all or part of a PPP loan, it may reapply for an amount equal to the difference between the amount retained and the maximum amount applicable; and for a borrower who did not accept the full amount of the loan, it may request a modification to increase to the maximum amount applicable.