Round 2 of the Paycheck Protection Program

PPP Round 2 - maine sbdcSelect your status:

NEW, FIRST TIME PPP LOAN

SECOND DRAW PPP LOAN

IMPORTANT UPDATES & CHANGES – March 4th

Updated: 3/29/2021

RECENT UPDATES & CHANGES

Recent changes to the program were announced to help make the Paycheck Protection Program more accessible to the smallest of businesses. Here’s what’s changing:
  • Application deadline has been extended to May 31, 2021
  • For two weeks, the program will only accept applications from businesses with fewer than 20 employees. This period is from February 25-March 10th.
  • Changes to the maximum calculation for Schedule C filers which include sole proprietors, independent contractors, and self-employed. These individuals will now be able to use their gross income, or line 7 of their 1040 Schedule C. There is also funds set aside to help these Schedule C applicants without employees that are located in low-to-moderate income census tracts.
  • Eliminates exclusions to those with prior non-fraud felony convictions
  • Eliminates exclusions for those who may have past or current delinquencies of student debt
  • Provides access to non-citizen business owners who are lawful US residents
  • Updated applications to help understand the demographic who is accessing funds, and making sure it’s being made broadly available

All information provided below on both First and Second Draw loans has been updated to reflect this new information.


FIRST TIME PPP LOAN:

What is the Paycheck Protection Program (PPP)? PPP provides small businesses with funds to pay payroll costs and other eligible expenses. In order to be forgiven, no less than 60% of the loan needs to be used toward payroll with the remaining amount being spent on eligible expenses. Read the full details of Round 2 funds for first-time borrowers here.

How to Apply: Through a participating lender or community development organization. Find a lender here. Schedule C filers should use this application. Everyone else should use the application here

 Application Deadline: Deadline has been extended to May 31, 2021

Who is eligible? You must be in operation as of February 15, 2020, and either had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC or you were an eligible self-employed individual, independent contractor, or sole proprietorship with no employees. Eligible organizations include:

  • A small business, as defined by the SBA, with 500 or fewer employees
  • Sole proprietors, the self-employed, and independent contractors 
  • Certain nonprofits, housing cooperatives, and news organizations also qualify

You must submit documentation sufficient to establish eligibility and to demonstrate the qualifying payroll amount, which may include, as applicable, payroll records, payroll tax filings, Form 1099-MISC, Schedule C or F, income, and expenses from a sole proprietorship, or bank records.

Calculating Payroll on Your Application: Calculate your maximum borrow level. Remember to include yourself in the payroll and employee count! You will be asked to submit documentation to establish eligibility. Once the loan is distributed, you cannot revise the calculation. 

For Sole Proprietors with No Employees (Revised 3/4/2021):

  • Step 1: Find your 2019 or 2020 IRS Form 1040 Schedule C Line 7 gross income -or- Line 31 Net Income. If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less,
    you are not eligible for a PPP loan.
  • Step 2: Calculate the average monthly net profit amount (divide the amount from
    Step 1 by 12).
  • Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.
  • Step 4: Add the outstanding amount of any Economic Injury Disaster Loan
    (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to
    refinance, less the amount of any advance under an EIDL COVID-19 loan
    (because it does not have to be repaid).
  • You must provide tax documentation with your loan application to substantiate the loan.

For Sole Proprietors with With Employees (Revised 3/4/2021):

  • Step 1: Compute 2019 or 2020 payroll (using the same year for all items) by adding:
    • Your 2019 or 2020 IRS Form 1040 Schedule C Line 7 gross income -or- Line 31 Net Income. Minus your employee payroll costs reported on lines 14, 19, and 26 of IRS Form 1040, Schedule C, up to $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred (if this amount is over $100,000, reduce it to $100,000, or if this amount is less than zero,
      set this amount at zero)
    • 2019 or 2020 gross wages and tips paid to your employees whose
      principal place of residence is in the United States, computed using 2019
      or 2020 IRS Form 941 Taxable Medicare wages & tips (line 5c, Column
      1) from each quarter plus any pre-tax employee contributions for health
      insurance or other fringe benefits excluded from Taxable Medicare wages
      & tips; subtract any amounts paid to any individual employee in excess of
      $100,000 on an annualized basis, as prorated for the period during which
      the payments are made or the obligation to make the payments is incurred,
      and any amounts paid to any employee whose principal place of residence
      is outside the United States; and
    • 2019 or 2020 employer contributions to employee group health, life,
      disability, vision and dental insurance (portion of IRS Form 1040,
      Schedule C line 14 attributable to those contributions); retirement
      contributions (IRS Form 1040, Schedule C, line 19); and state and local
      taxes assessed on employee compensation (primarily under state laws
  • Step 2: Calculate the average monthly net profit amount (divide the amount added from
    Step 1 by 12).
  • Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.
  • Step 4: Add the outstanding amount of any Economic Injury Disaster Loan
    (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to
    refinance, less the amount of any advance under an EIDL COVID-19 loan
    (because it does not have to be repaid).
  • You must provide tax documentation with your loan application to substantiate the loan.

For Other Types of Businesses: 

  • Step 1: Aggregate payroll costs from 2019 or 2020 for employees whose principal place of residence is the United States. Don’t forget to include your own pay if you take an owner’s draw.
  • Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 
  • Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
  • Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
  • Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL)  made between January 31, 2020 – April 3, 2020, that you seek to refinance. Do not include the amount of any EIDL Advance (because it does not have to be repaid).
  • You must provide tax documentation with your loan application to substantiate the loan.

Seasonal businesses and farmers have the option to calculate their payroll differently. Contact your SBDC advisor for more information. 

How can I use the money? PPP loans can be used to support ongoing operations in the following areas:
  • Payroll costs including benefits
    • Salary, wages, commissions, and tips (capped at $100,000 per employee)
    • Employee benefits including costs for vacation, parental, family, medical, or sick leave. Sick and family leave that utilized the Families First Coronavirus Response Act does not qualify.
    • Allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
    • State and local taxes assessed on compensation
    • For a sole proprietor with no other employees: Schedule C, Line 31 will reflect the owner’s salary (capped at $100,000)
  • Interest on a mortgage or on rent
  • Utility payments
  • Interest payments on any debt obligations that were incurred before February 15, 2020
  • Refinancing on SBA EIDL loan (made between 01/31/2020 – 04/03/2020)
  • Covered Operations Expenditures which includes software for business operations such as payroll, billing, accounting, and others. 
  • Covered property damage costs related to disturbances of 2020 not covered by insurance
  • Covered supplier costs that supplied goods during the covered period and that had a contract, order, or agreement in effect prior to the covered period. 
  • Covered worker protection expenditures that facilitate the adaptation of the business activities to comply with required guidelines established by federal or state organizations.  These include expenses related to employee and customer safety and include expenditures such as drive-through window installation, air filter or ventilation, physical barriers, and more. 

How soon do you have to use funds? You must use the funds in the 8 to 24 weeks after you’ve received the loan. 

How much of the loan is forgiven? Forgiveness is based on:

  • At least 60% of the funds need to be spent on payroll. The other 40% must be spent on allowable expenses (see above) 
  • Number of Staff: Businesses must restore staff or salary levels that were previously reduced. Companies that document their inability to rehire workers and their inability to find similarly qualified workers maintain forgiveness amounts. 
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee.

What are the loan terms? The interest rate is 1% fixed rate. All payments are deferred for at least 10 months, though interest will accrue during this period. The loan is to be repaid in a maximum of 5 years, with no prepayment penalties. You will not need to pledge any collateral to receive this loan. 


SECOND DRAW PPP LOANS APPLICANTS:

The second draw of the PPP is for borrowers that previously received the first round of the PPP loan and have used or will use the full amount of their initial loan for authorized purchases on or before the expected date of disbursement of the second draw. Like the first loan, no less than 60% of the loan needs to be used toward payroll with the remaining amount being spent on eligible expenses. For full details on the second draw, visit the SBA site here.

How to Apply: Through a participating lender or community development organization. Find a lender here. Application for Schedule C filers can be found here. For everyone else, the application can be found here.

When to Apply: The program will only accept applications for businesses with fewer than 20 employees from February 25 – March 10, 2021. Reach out to your lender for more details.

Application Deadline: Deadline has been extended to May 31, 2021

Who is eligible? Those who received a first PPP draw, who have not permanently closed may be eligible if the organization has:

  • Used or will use the full amount of their original PPP Loan on or before the expected date of the second draw. 
  • Used or will use the full amount of the original PPP Loan on eligible expenses
  • 300 or fewer employees
  • Experienced a 25% or greater revenue reduction, calculated by comparing quarterly gross receipts for one quarter in 2020 to the corresponding quarter of 2019. Any amount of forgiveness on the first draw of PPP received in 2020 is excluded from a borrower’s gross receipts.

You must submit tax documentation to establish eligibility.

Calculating Payroll on Your Application: Calculate your maximum borrow level. Remember to include yourself in the payroll and employee count! You will be asked to submit documentation to establish eligibility. Once the loan is distributed, you cannot revise the calculation. 

For Businesses with Employees

  • For Sole Proprietors with No Employees (Revised 3/4/2021):

    • Step 1: Find your 2019 or 2020 IRS Form 1040 Schedule C Line 7 gross income -or- Line 31 Net Income. If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less,
      you are not eligible for a PPP loan.
    • Step 2: Calculate the average monthly net profit amount (divide the amount from
      Step 1 by 12).
    • Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.
    • Step 4: Add the outstanding amount of any Economic Injury Disaster Loan
      (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to
      refinance, less the amount of any advance under an EIDL COVID-19 loan
      (because it does not have to be repaid).
    • You must provide tax documentation with your loan application to substantiate the loan.

    For Sole Proprietors with With Employees (Revised 3/4/2021):

    • Step 1: Compute 2019 or 2020 payroll (using the same year for all items) by adding:
      • Your 2019 or 2020 IRS Form 1040 Schedule C Line 7 gross income -or- Line 31 Net Income. Minus your employee payroll costs reported on lines 14, 19, and 26 of IRS Form 1040, Schedule C, up to $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred (if this amount is over $100,000, reduce it to $100,000, or if this amount is less than zero,
        set this amount at zero)
      • 2019 or 2020 gross wages and tips paid to your employees whose
        principal place of residence is in the United States, computed using 2019
        or 2020 IRS Form 941 Taxable Medicare wages & tips (line 5c, Column
        1) from each quarter plus any pre-tax employee contributions for health
        insurance or other fringe benefits excluded from Taxable Medicare wages
        & tips; subtract any amounts paid to any individual employee in excess of
        $100,000 on an annualized basis, as prorated for the period during which
        the payments are made or the obligation to make the payments is incurred,
        and any amounts paid to any employee whose principal place of residence
        is outside the United States; and
      • 2019 or 2020 employer contributions to employee group health, life,
        disability, vision and dental insurance (portion of IRS Form 1040,
        Schedule C line 14 attributable to those contributions); retirement
        contributions (IRS Form 1040, Schedule C, line 19); and state and local
        taxes assessed on employee compensation (primarily under state laws
    • Step 2: Calculate the average monthly net profit amount (divide the amount added from
      Step 1 by 12).
    • Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.
    • Step 4: Add the outstanding amount of any Economic Injury Disaster Loan
      (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to
      refinance, less the amount of any advance under an EIDL COVID-19 loan
      (because it does not have to be repaid).
    • You must provide tax documentation with your loan application to substantiate the loan.

      For Other Types of Businesses with Employees

      • Step 1: Aggregate payroll costs from 2019 or 2020 for employees whose principal place of residence is the United States. Don’t forget to include your own pay if you take an owner’s draw.
      • Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 
      • Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
      • Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
      • Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL)  made between January 31, 2020 – April 3, 2020, that you seek to refinance. Do not include the amount of any EIDL Advance (because it does not have to be repaid).
      • You must provide tax documentation with your loan application to substantiate the loan.

      Seasonal businesses and farmers have the option to calculate their payroll differently. Contact your SBDC advisor for more information. 

    How can I use the money? PPP loans can be used to support ongoing operations in the following areas:

    • Payroll costs including benefits
      • Salary, wages, commissions, and tips (capped at $100,000 per employee)
      • Employee benefits including costs for vacation, parental, family, medical, or sick leave. Sick and family leave that utilized the Families First Coronavirus Response Act does not qualify.
      • Allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
      • State and local taxes assessed on compensation
      • For a sole proprietor with no other employees: Schedule C, Line 31 will reflect the owner’s salary (capped at $100,000)
    • Interest on a mortgage or on rent
    • Utility payments
    • Interest payments on any debt obligations that were incurred before February 15, 2020
    • Refinancing on SBA EIDL loan (made between 01/31/2020 – 04/03/2020)
    • Covered Operations Expenditures which includes software for business operations such as payroll, billing, accounting and others. 
    • Covered property damage costs related to disturbances of 2020 not covered by insurance
    • Covered supplier costs that supplied goods during the covered period, that had a contract, order, or agreement in effect prior to the covered period. 
    • Covered worker protection expenditures that facilitate the adaptation of the business activities to comply with required guidelines established by federal or state organizations.  ((A) operating or capital expenditures. These include expenses related to employee and customer safety and include expenditures such as drive-through window installation, air filter or ventilation, physical barriers, and more. 

    How soon do you have to use funds?You must use the funds in the 8 to 24 weeks after you’ve received the loan. 

    How much of the loan is forgiven? Forgiveness is based on:

    • Payroll: At least60% needs to be spent on payrollin order for the loan to be forgiven
    • Number of Staff: Businesses must restore staff or salary levels that were previously reduced. Companies that document their inability to rehire workers and their inability to find similarly qualified workers maintain forgiveness amounts. Companies would be covered separately if they show that they couldn’t resume business levels from before Feb. 15 because they were following federal requirements for sanitization or social distancing.
    • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee.

    What are the loan terms? The interest rate is 1% fixed rate. All payments are deferred for at least 10 months, though interest will accrue during this period. The loan is to be repaid in a maximum of 5 years, with no prepayment penalties. You will not need to pledge any collateral to receive this loan. 


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    Looking for information on the first round of PPP? Visit this page.