Last updated 03/18/2021
On March 27, 2020, Congress passed the Coronavirus Aid, Relief and Economic Security Act of 2020 (CARES Act) establishing the Paycheck Protection Program (PPP). On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) became law. The Economic Aid Act extends the authority to make PPP loans through March 31, 2021 and revises certain PPP requirements.
We answer your most pressing questions about PPP here. We will continue to update this page as more information becomes available.
Paycheck Protection Program loans are available to a wide range of individuals and entities that are experiencing economic hardship as a result of the COVID-19 pandemic and its economic consequences. The purpose of the loan program is to help businesses keep their employees and meet their existing payment obligations through these uncertain times.
Accordingly, anyone seeking a Paycheck Protection loan will need to certify that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.
See Does my business qualify for a First Draw PPP Loan?
See Does my business qualify for a Second Draw PPP Loan?
A First Draw PPP Loan is a loan available to a first time borrower who did not receive a PPP loan in the first rounds of PPP loans made in 2020 under the CARES Act.
A Second Draw PPP Loan is a loan available to borrowers that previously received a PPP loan and have used or will use the full amount of their initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP Loan.
Most small business types are eligible for a First Draw PPP Loan, including corporations (C corps and S corps), limited liability companies, independent contractors, sole proprietors, self-employed individuals, non-profit organizations, veterans organizations, tribal businesses, and partnerships.
Your small business must also:
To be eligible for a Second Draw PPP Loan, independent contractors, self-employed individuals, sole proprietors, and small businesses must:
An business or self-employed person who applies for a PPP Loan (“Applicant”) is not eligible for a First Draw PPP Loan or Second Draw PPP Loan if any of the following are true:
Additionally, the following are not eligible for a Second Draw PPP Loan if any of the following are true:
Yes, if the business was in operation for any 12-week period between February 15, 2019 and February 15, 2020.
A borrower will be considered together with its affiliates for purposes of determining eligibility for the PPP. However, the detailed affiliation rules contained in 13 CFR 121.103 do not apply to otherwise eligible PPP borrowers.
Yes, both public and private nonprofits are eligible.
Yes. There are several uses of funds allowed under this program, and anyone seeking funds under this program will need to certify that funds will be used for an allowable purpose. Those purposes include:
* Must be in force prior to February 15, 2020 to be allowable.
Funds used for allowable purposes will be eligible for forgiveness once proper documentation of the expenses has been provided to the SBA lender. For payments of existing debt allowed under this program, only the interest portion of those payments will be eligible for forgiveness.
For most borrowers, the PPP loan amount will be equal to 2.5 times the borrower’s average monthly payroll costs during a 1-year period. Borrowers may elect either 2019 or 2020 as their 1-year period and borrowers who are not self-employed may elect the precise 1-year period before the date on which the loan is made to calculate payroll costs.
Borrowers who are refinancing an SBA EIDL loan made between January 31, 2020 and April 3,
2020 will also add their outstanding SBA EIDL loan amount (not including any EIDL advance amounts) to their PPP loan amount.
Entities in industries assigned to NAICS code 72 (Accommodations and Food Services) may receive Second Draw PPP Loans of up to 3.5X average monthly payroll costs.
The loan is capped at $10 million for First Draw PPP Loans and $ 2 million for Second Draw PPP Loans.
The definition of “payroll costs” for the Paycheck Protection Program includes the following expenses:
Payroll costs, however, do not include the following expenses:
Yes, the program deadline is March 31, 2021.
What is the difference between the Form 2483 and the Form 2483 C?
Form 2483 C is used by sole proprietors, individual contractors, self-employed individuals, single member LLC and joint venture borrowers who use their gross amount to calculate their payroll costs and the maximum loan amount they can apply for. The 2483 is the original form used by all other borrowers not using the gross amount to calculate payroll costs and maximum loan amount.
Can I apply for a First Draw PPP loan and a Second Draw PPP loan in 2021?
Yes, a borrower can apply for a First Draw loan and once the funds have been used or will be used for the allowable purposes, then a borrower may apply for a Second Draw PPP loan. A First Draw PPP loan in 2021 must be fully disbursed before applying for a Second Draw PPP in 2021.
No. An eligible borrower may not receive more than one First Draw PPP Loan. This means that if you apply for a PPP loan you should consider applying for the maximum amount. Any borrower who received a PPP loan in 2020 received a First Draw PPP Loan and is not eligible to receive another First Draw PPP Loan, but may be eligible for a Second Draw PPP Loan.
In order to qualify for loan forgiveness, you must spend your PPP loan funds on allowable costs during the “loan forgiveness covered period.”
The “loan forgiveness covered period” is the period beginning on the date the lender disburses the PPP loan and ending on any date selected by the borrower between 8 and 24 weeks since disbursement.
See Do the PPP loan proceeds need to be used for specific purposes?
If you submit to your lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender (or notifies your lender that no loan forgiveness is allowed).
Yes, up to the full amount of the loan and any accrued interest may be forgiven. Borrowers may seek forgiveness after loan proceeds have been spent on allowable costs. See Do the PPP loan proceeds need to be used for specific purposes? Only the amounts spent on allowed purposes during the loan forgiveness covered period will be forgiven, and any remaining balance of the loan must be repaid according to the loan terms. See What is the Loan Forgiveness Covered Period?
To receive full loan forgiveness, a borrower must use at least 60% of the PPP loan for payroll costs, and not more than 40% of the loan forgiveness amount may be attributable to non payroll costs. If for instance a borrower uses less than 60% of the loan for payroll costs, it will not receive the full amount of loan forgiveness it might otherwise be eligible to receive. Instead, the borrower will receive partial loan forgiveness.
No borrower will receive forgiveness without submitting to the lender that is servicing the PPP oan the documentation required by the SBA.
No. The EIDL Advance amount received by the borrower will not reduce the amount of forgiveness to which the borrower is entitled and it will not be deducted from the forgiveness payment amount that SBA remits to the lender
These FAQs have been prepared for general information purposes only and are not intended to be relied upon as legal, accounting, tax or other professional advice. Information contained in the FAQs is based upon PPP details that are frequently evolving and subject to change. For the most up-to-date guidance, please consult the U.S. Small Business Administration (SBA) (www.sba.gov), Department of the Treasury (www.treasury.gov) and/or your own legal and tax advisors prior to taking any action. Please refer to your advisors for specific advice.