Here's What You Need to Know to Apply for the Second Round of PPP Funding

A little over two weeks after the $900 billion stimulus package was passed, the second round of Paycheck Protection Program (PPP) applications are finally open. Although only community financial institutions are able to accept applications this week, the Small Business Administration will open up applications to all lenders next week.

If you are considering applying for the PPP, whether you’ve already received a PPP loan or not, here’s what you need to know.

Bottom-line: We will have partner lenders on our PPP Tracker on the Skip App by beginning of next week. Until then, hang tight.

Do You Need a First or Second Draw Loan?

The first step in applying for the PPP is determining whether you are a first or second draw borrower.

First draw PPP loans are loans for businesses, nonprofits and independent contractors who did not receive a PPP loan during the first round of funding. First draw loans are 2.5x the monthly payroll costs of your business, up to a maximum of $10 million. To qualify for a first draw loan, you must have 500 or fewer employees and have been in operation on February 15, 2020. First draw applicants include businesses who applied during the first round and were denied.

Second draw PPP loans are loans for those that already got a PPP loan during the first round of funding.  Second draw loans are 2.5x the monthly payroll costs of your business, up to a maximum of $2 million. To qualify for a second draw loan, you must have 300 or fewer employees, have received a loan during the first round (and used it for authorized expenses only), and have experienced a 25% reduction in receipts in one quarter of 2020 as compared to the same quarter of 2019.

What Do You Need to Provide to Apply For A First Draw PPP Loan?

To apply for a first draw loan, you will need some basic information about your business and your expenses. Although lender requirements might vary slightly, here are general guidelines on the information you’ll need to provide:

-Your average monthly payroll costs

-Your bank statements

-Proof of mortgage or rent payments and utility bills

-Information about your number of employees and owners

-Your payroll tax filings

What Do You Need to Provide to Apply for a Second Draw PPP Loan?

To apply for a second draw loan, you will need to provide the same information as first draw borrowers, plus a few more details. That will probably include:

-Proof of 25% reduction in revenue (for smaller loans, this may not be required until you apply for loan forgiveness, but it is an eligibility requirement)

-Documentation of the expenses you spent your first PPP loan on

You can apply for a second draw PPP loan with the same lender that you got your first loan from or another lender. If you apply with the same lender, you may not have to provide as much information.

What are the Eligible Payroll Costs?

-Borrowers can receive up to 2.5x their eligible payroll costs from the PPP. Eligible payroll costs don’t just include wages and salaries. Here are the costs you can include when you calculate your payroll costs:

-Employee compensation of $100,000 or less, whether in the form of salaries, wages or commission.

-Estimated cash tips

-Sick leave, family leave or paid time off.

-Employer-provided insurance benefits costs (whether health insurance or other forms, like life or dental)

-State or local wage taxes

If you’re an independent contractor, you can only include income or net earnings from self-employment.

You can find more information about the PPP and track the application process and the latest news on our app, which you can download at TrackPPPLoan.com.

📌 Disclaimer: This is for illustrational purposes only and not to be construed as tax, accounting, or legal advice. Work with your lender further if you have questions.