In March 2022, the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act brought much-needed relief to smaller businesses using the first round of Paycheck Protection Program (PPP) loans. These forgivable loans helped cover payroll expenses, rent, and utilities for small businesses struggling because of the pandemic.
Unfortunately, funds were depleted and PPP loans were no longer being issued. That is before the passage of legislation on December 27, 2022, which included additional funding for any second round of PPP funding.
Whether you’ve already been with the PPP application process or you’re trying to find funding the very first time, this informative article is perfect for you. We’re going to cover the most faq's surrounding the second round of PPP funding. We’ll cover topics like the requirements you must meet to receive a loan, how funds may be used, and whether you could get another PPP loan should you already received one (spoiler alert: you can!)
Keep reading to find the answers to your questions about PPP loans. Get your PPP FAQs, here:
When may be the deadline to apply for a PPP loan?
Applications for Round 2 of PPP loans opened the week of January 11, 2022. The deadline for trying to get a PPP loan was extended to May 31, 2022, however the SBA announced on May 5, 2022 that general funds for that program were depleted.
How much money can one achieve with a home PPP?
Borrowers can receive a PPP loan comparable to 2.Five times average monthly payroll costs in 2022 or 2022. Borrowers in the accommodations and food services sectors can receive loans equal to 3.Five times average monthly payroll costs in 2022 or 2022. Maximum borrowing amounts are capped at $10 million for first-time borrowers and $2 million for borrowers going for a second loan.
Am I entitled to a PPP loan?
There are a few requirements for receiving a PPP loan. If this sounds like the first PPP loan (first draw), you are entitled should you meet the size standards from the Sba (SBA). For most industries, this really is 500 or fewer employees. If you have multiple business locations, you may still qualify provided each location meets the SBA’s size standards. Different size limitations may apply to specific industries.
If you are trying to get another PPP loan (second draw), the dimensions standards are tightened up. You may not convey more than 300 employees. For businesses with multiple locations, each location should have 300 or fewer employees.
Businesses applying for a second draw must also show a reduction of at least 25% in gross receipts between comparable quarters in 2022 and 2022.
Whether you’re taking your first or second draw, all eligible businesses should have been in operation just before February 15, 2022.
Are sole proprietors entitled to a PPP loan?
Sole proprietors may be eligible for a PPP loan. To become eligible, your principal place of residence must be within the U.S. and you had to have filed or will file a Form 1040 Schedule C for 2022. If you’re inside a partnership, you’ll treat each partner’s income like a payroll cost.
While you can get a PPP loan like a sole proprietor, be aware that declaring one may complicate any state unemployment claims you have now.
Where can one obtain a PPP loan?
There are a number of banks and lenders which are or is going to be accepting applications for that second round of PPP loans. Should you previously received a PPP loan, you can apply for a second loan with your original lender. Currently, there aren't any rules prohibiting you from selecting another lender for your second loan, should you so choose.
If you’re new to PPP loans, you can start your search with your own bank or lender. You may also explore other banks and lending institutions in your town. And don’t just look to the big lenders — many borrowers in the first round found great success working with smaller, lesser-known lenders.
You may even find an online lender that simplifies the applying process. Why go for your local bank when you are able check out these online lenders that offer PPP loans straight from your home or office?
Are third party loan matching services safe and trustworthy?
Whether or otherwise loan matching services are safe and trustworthy for PPP loans generally correlates to whether they’re trustworthy for loan matching in general. If you’re going to make use of a matching service, do your research and make sure there is a good reputation, and seek out detailed reviews of the services in question. Remember that the good services won't be able to match you with a lender if you don’t meet PPP eligibility requirements.
Additionally, you shouldn't pay money to file for your PPP application for the loan.
Can I hire somebody to accomplish my PPP application for me?
You can “hire” a certified loan agent to help you together with your application. Based on guidance released, this individual can be one of the following:
- An attorney
- An accountant
- Someone who prepares an applicant’s application for financial help and it is employed and compensated through the applicant
- Someone who assists a lender with originating, disbursing, servicing, liquidating, or litigating SBA loans
- A loan broker
- Any other individual or entity representing a job candidate by working with the SBA
Note that agents should not be paid by the applicant with this service. Agent fees are to be paid of lender fees, with the lender paying the agent. Compensation is set through the SBA and ranges from 0.25% to 1% with respect to the size of the borrowed funds.
Is it alright to apply with multiple lenders?
Yes, you can apply with multiple lenders. Bear in mind, however, that you simply don’t want multiple applications to become submitted to the SBA from multiple lenders as this could look like fraud. Should you choose apply with multiple lenders, be sure to ask your lender to inform you when they submit your application towards the SBA so that you can cancel your other applications. And whatever you do, don’t accept multiple PPP loans on the same draw.
Do I need a company bank account to apply for a PPP?
The PPP program itself does not require that you have a business checking account, but your lender may attempt to insist that you have one. Should you don’t have a business bank account and your lender’s policy demands one, you might want to use another lender, consider opening a business check account, or seeing if your lender is willing to support you (this is more likely for those who have a longstanding relationship together with your lender).
Can I apply for a new PPP loan if I already got one?
If you received a PPP loan in the first round, you might qualify for a second draw provided you meet certain conditions. To be able to receive a second draw, you must satisfy the following requirements:
- No more than 300 employees
- Funds from the first draw have been or is going to be allocated to authorized expenses
- Must have experienced a minimum of a 25% reduction in gross receipts during comparable quarters in 2022 in accordance with 2022
If your company has multiple locations, you might still qualify for funding provided each location has 300 or fewer employees. Publically traded businesses or businesses with strong ties with the People’s Republic of China (including Hong Kong) are ineligible to get PPP loans.
In some cases, you may be in a position to modify your original loan application if all or a portion of loan funds weren't accepted. Talk with your lender to find out if you qualify.
What’s the main difference between the First Draw and Second Draw PPP loans?
Businesses which are going for a first draw for the second round of PPP funding didn't previously get a PPP loan. If your business did not accept any some of a loan within the first round of funding, they might be able to modify their original applications for a first draw.
If a business previously received a PPP loan and accepted the full amount, they might be eligible for a a second draw — quite simply, another loan.
There are a few key differences between the first and second draw in terms of how you can qualify. To be eligible for a another draw, businesses must have 300 or fewer employees. For a first draw, the necessity stands at 500 or fewer. There may be some size standard exceptions according to your industry.
Borrowers trying to get a second draw should also demonstrate a discount of at least 25% in gross receipts between comparable quarters in 2022 and 2022.
Does my first PPP loan have to be forgiven to get a second one?
Your first PPP loan doesn't have to be forgiven to be able to be eligible for a another one. However, you must have already spent or plan to spend all funds from your first loan to be able to qualify for a second draw.
My lender says I have to wait eight weeks between First Draw and Second Draw loans. Is the fact that true?
Yes, you effectively need to wait 8 weeks between your third and fourth draws. The reason behind this is that SBA requires all your first draw funds to have been spent before you can get another, and each PPP loan is presumed to cover at least 8 weeks. We say “effectively,” since the interim final guidance released through the SBA on March 17, 2022 contains language which makes it sound as if it’s easy to certify the funds will (in the future tense) be spent. So there’s some gray area here, but we'd expect that many lenders will follow the conservative interpretation.
I’m eligible for more money under new PPP rules. Can I reapply to get the difference?
You can amend your application up to the point that money is deposited into your account. Next, your choices become more limited. There are a handful of instances that you might be able to get the loan increased by submitting a request with the SBA’s E-Tran servicing site–these mostly affect applicants who're filing as sole proprietors/partners or contractors. Some applicants who had previously returned their or were offered a lot more than they received can also be able to submit a request.
What is really a CFI and am I permitted to apply via a CFI?
A CFI is a Community Lender. CFIs include Community Financial Development Institutions (CDFI), Community Development Corporations (CDC), Minority Depository Institutions (MDI), and Microlender Intermediaries. Many CFIs are accepting PPP loan applications.
Applications from CFIs are being prioritized through the SBA. These applications would be the first in the second round of PPP funding to be accepted and processed through the SBA.
CFIs use underserved businesses and communities. Allowing these lenders to submit applications first can help many companies — specially those that didn’t receive funding within the first round — get a PPP loan within this round.
You may be eligible to use via a CFI if your clients are situated in a rural area or underserved community. Smaller businesses requiring smaller loans and businesses of women or minorities can also be eligible to apply. Contact CFIs in your area to determine if you’re eligible.
There are errors within my application. What can I actually do?
Your smartest choice would be to fix the errors before your lender submits your application to the SBA. Unfortunately, there doesn’t appear to be any consistent and foolproof way to correct errors after the SBA has received the applying. The best choice is to work with your lender and appear into filing a Lender Certification for Reinstatement or Correction of Paycheck Protection Program (PPP) Loan form.
What is the timeline to obtain a PPP loan? Can there be in whatever way to hurry in the process?
The timeline to obtain approved for any PPP loan varies by lender. Once you’re approved, the SBA requires lenders to disburse funds within 10 calendar days. Some borrowers report frozen accounts or holds that delay their processing. The best way to avoid a hold would be to make sure you’ve provided all of the documentation your lender might need. Also double and triple-check the application to make sure all your details are correct and up-to-date to reduce your likelihood of getting stuck halfway through the process. If there is a problem, get in touch with your lender.
Remember this is an extremely popular program which most financiers are overwhelmed with applications.
My PPP loan was approved but I still haven’t gotten my money in the promised time frame. Will I get my money?
The SBA allows up to 20 days for funds to become disbursed, after which the lender has to cancel the borrowed funds. In case your loan has not be disbursed within that point, something went wrong along the way.
My loan was approved, but isn’t progressing. Can I release the applying and apply having a different lender?
You can release the application up until the purpose your loan is approved. Once it’s approved, you’ll trigger a rejection from the SBA because another application has been submitted. If you’re likely to try multiple applications, make certain you’re in good communication with your prospective lenders so that you’re able to withdraw your other applications before they’re submitted.
What do these PPP status terms mean?
The status terms you encounter whenever you apply for a PPP loan can vary depending on your lender. If you want a good example of what these terms might mean, Womply provides a detailed explanation from the statuses it uses.
How do I check the status of my PPP loan?
You can check the status of the PPP loan by either contacting your lender or even the SBA. You can read more about how to go about this within our How To Check The Status Of the Paycheck Protection Program (PPP) Loan Application feature.
My application was denied because of low credit. Exactly what do I actually do?
The SBA has suspended credit requirements for PPP loans, so technically you shouldn’t be rejected due to credit. However, some lenders reportedly are denying applications based on credit score. As this is happening at the lender level, the best choice would be to try a different lender if you’re rejected.
How can I use my PPP funds?
For the second round of PPP funding, there are a variety of the way you can spend your funds to get loan forgiveness. Similar to the first round, you may receive loan forgiveness by using your loan to cover payroll expenses, rent or mortgage payments, or utilities.
With round two, there are additional qualifying uses for PPP funds. Funds may be used to purchase personal protective equipment for employees in order to cover other outlays related to government-imposed COVID-19 restrictions. Funds may also be used to pay for software or cloud computing services used for inventory, accounting, record keeping, recruiting, or supply tracking. Supplier costs essential for the operations of the business will also be covered. Finally, companies that were impacted by riots or other riots that didn't have damages covered by property insurance or weren't already compensated in other ways may use PPP funds to cover the expense of damages.
One last thing to bear in mind is that to be able to receive full loan forgiveness, a minimum of 60% of funds should be allocated to payroll expenses.
Can I use PPP funds to pay myself?
Yes, you should use PPP to pay for yourself with the owner compensation replacement clause.
Do the new loan usage guidelines affect first draw PPP loans?
The expanded loan usage guidelines affect all loans in the second round of PPP funding. This means that first draw PPP loans and 2nd draw PPP loans can be utilized toward these new qualifying expenses.
How will i apply for forgiveness?
You can apply for loan forgiveness after you have used all funds that you want to possess forgiven. This is often any a portion of the loan. Remember, to get full loan forgiveness, you'll want spent the loan on qualifying expenses, and at least 60% of loan funds must have been employed for payroll expenses. You must also maintain your employee headcount and not decrease any employee’s salaries or wages by more than 25%; otherwise, your quantity of loan forgiveness will disappear.
When you’re ready to make an application for loan forgiveness, contact your lender to get the right loan forgiveness application. If you meet specific conditions, you may be permitted to fill out a shortened version of the application.
In accessory for your application, additionally, you will need documentation supporting how loan funds were spent. This includes however is not restricted to bank account statements, tax forms, receipts, canceled checks, or invoices. This documentation will be submitted to your lender together with your forgiveness application.
After you have completed the application and compiled your documentation, this packet will need to be submitted to your lender. Make sure to communicate with your lender through the process to determine the status of your application, if more documentation is required, or if you have questions about the procedure. Your lender will let you know in case your application was accepted, the quantity of loan forgiveness, and then any amount borrowed which was not forgiven. If all or some of your loan is not forgiven, your lender will provide you with information on when you really need to begin repaying the loan.
One final thing to note is that your loan forgiveness application ought to be submitted prior to the maturity date of the loan. If you do not apply for loan forgiveness within 10 months from the last day's your covered period, the loan will no longer be deferred and you will need to start making payments.
Is PPP forgiveness likely to be automatic?
While Congress is pushing for smaller loans to become automatically forgiven, there is no legislation in position by yet. The SBA has simplified the loan forgiveness application for smaller loans, offering some relief to borrowers. We continues to publish updates if legislation is passed later on.
How do I return my PPP loan?
You can cancel the application up to time the funds land inside your account, but following the Safe Harbor exemption expired in 2022, you can no longer “return” your PPP loan. However, there isn't any prepayment penalty for PPP loans, so there’s nothing stopping you against immediately paying down the loan with the lump sum payment you obtain.
Do the new tax deduction rules apply to the very first round of PPP funding?
Initially, expenses taken care of with PPP funds could not be claimed as deductions on income tax returns. Fortunately, Congress designed a alternation in December 2022 that now allows expenses paid for using the second round of PPP funds to be deducted from the business taxes. Note: This new tax break rule is relevant towards the first round of PPP funding.
Tax time is approaching, and the new changes can be overwhelming to the small business owner. Make sure to check out How PPP Loans & EIDL Advances Will Affect Your 2022 Taxes before you decide to file.
