As the U.S. continues to battle COVID-19 and the economic hardships that have accompanied it, the government is rolling out a second round of the Paycheck Protection Program (PPP).
In order to offset the issue of small businesses receiving insufficient funding last time, small businesses are getting a headstart for the second loan. Between February 24 and March 9, 2021, only small businesses and nonprofits can apply. For the rest of March, the PPP loan applications will be open to all eligible businesses.
Here is everything your small business should know before applying for a second PPP loan.
What is Round 2 of the Paycheck Protection Program (PPP2)
The Paycheck Protection Program offers loans to help businesses keep employees on payroll during COVID-19. Now, certain businesses are eligible for a second loan. Many employers are also eligible for PPP loan forgiveness.
Click here to find out more about PPP loan forgiveness.
If your business has less than 300 employees and suffered a 25% decrease in gross receipts from 2019 to 2020, you are probably eligible for the second round of PPP. You should also have received a first PPP loan and only used it for the authorized expenses.
What Can PPP Loans Be Used For?
In order to qualify for PPP loan forgiveness and a second PPP loan, it’s extremely important that your business only use PPP loans for the approved expenses. Here is what you can safely spend your loan on.
Just like the first loan, the second round of PPP can be spent on utilities, up to 60% of payroll, rent, and health insurance that is sponsored by the employer.
Unlike the first round, PPP2 is expanding to include more essential expenses for keeping your business going. This includes operational expenses, property damages, supplier costs, and worker protection.
How to Apply for PPP2
Employers can apply for a second PPP loan with the SBA. Click here for the PPP Second Draw Borrower Application Form.
How to Report COVID-19 Loans and Relief
As your business navigates these difficult times and makes decisions about PPP loans, it’s important to avoid additional expenses like IRS penalties. At ExpressEfile, we’re here to help you stay IRS compliant safely and simply.
When it comes to COVID-19 aid, there’s a lot to report on Form 941 each quarter. Click here to find out about the new Form 941 for the end of the Social Security deferral period. To avoid further IRS penalties if you found a mistake on one of your 1099 forms, ExpressEfile now supports 1099 corrections! Visit this blog to find out more.
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