01/08/2021 8:44:57 AM

PPP Round 2: New Year Same Pandemic

I know. You’re eager for information about PPP Round 2! But it feels like Groundhog Day around here. Not the good kind of Groundhog Day where scenes get cuter and funnier until Bill Murray gets the girl. It’s more like a horror movie when the victim runs upstairs with nowhere to escape and you know the monster is lurking behind the door. Much like last spring, I can’t get a single blog written before a new topic pops up or new regulations come down. The year is starting in a whirlwind!  

So much for the editorial rant. Now to the topic at hand. We had a high-level overview of PPP Round 2 in the last post. Here’s a deeper dive as it pertains to the typical dentist.

BASICS

• Date applications open: As soon as the banks are ready.
• Deadline for applying: March 31, 2021.
• Terms if not forgiven: 1% interest, repayment over 5 years.
• PPP Round 1, which I will shortcut as PPP#1, is officially called the “First Draw PPP Loan.”
• PPP Round 2’s official name is the “Second Draw PPP Loan.”

ELIGIBILITY

You must have:

• 300 or fewer employees and
• A drop in total revenue of at least 25% in any quarter of 2020 compared to the same quarter of 2019 and
• Received PPP#1 funds and
• Used ALL your PPP#1 funds on ELIGIBLE expenses.

A worksheet to help evaluate your quarterly revenue drop is available here.

LOAN AMOUNT

• Calculated the same as last time at 2.5 times your average monthly 2019 payroll costs. You can choose to use 2020 payroll costs, but those will likely be lower, so less appealing.
• If you are a partner or self-employed, your personal portion is based on net self-employment income, same as the first time around.

APPLICATION AND DOCUMENTS

• Noteworthy:  IF you apply at the same bank, and you used 2019 for your PPP#1 application, and you use 2019 for your new PPP#2 application, THEN you don’t have to submit additional support for this new application. All the support would be the same, so if you use the same bank, you don’t have to resubmit anything. Otherwise, you must submit all the same support as last time (payroll registers, 941s, etc, etc.).
• If your new loan is over $150K, you will have to provide evidence of your 25% required revenue drop.   
• If your new loan is under $150K, you do not have to provide evidence of your 25% required revenue drop. The requirement isn’t gone. You just don’t have to prove it…yet. You will have to submit support with your PPP#2 Forgiveness application.

Although there was talk of an economic need test being one of the requirements, that doesn’t seem to be the case.  

Bottom line: If you qualify for PPP#2, your 2020 payroll costs are down from 2019, and you liked your PPP#1 bank, your most efficient route will be to go back to that bank and reapply. If you had difficulty with them, especially if they didn’t accept your personal self-employment income as part of payroll costs, consider a new bank. We have a couple of great ones we can recommend.