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Paycheck Protection Program PPP1 vs. PPP2
With the new law, there has been confusion around the wording for Paycheck Protection Program Round 1 and Paycheck Protection Program Round 2.
Here are some clarifications:
PPP 1st Draw
Originally funded in March 2020. PPP funds ran out and a second round of funding came through with the Interim Emergency Bill that stated PPP would end August 8th, 2020. With the new law in December, this opens PPP 1st Draw back up to eligible borrowers.
- Businesses with 500 or fewer employees
- Sole props and independent contractors
- Nonprofits & churches
- Added 501(c)(6) eligible organizations
- Added Housing Cooperatives & News Organizations
- Certain entities who are involved in bankruptcy proceedings
- Entire listing of Eligible businesses can be located here.
- Note: If the business WAS NOT in operation before 2/15/2020, they are not considered eligible for PPP 1st or 2nd draw loans.
PPP 2nd Draw
Brand new to law. Allows only eligible PPP 1st Draw borrowers to obtain a 2nd Draw.
The new law will include over $284 billion for funds related to PPP. $35 billion will be for PPP 1st Draw, and $15 billion of this is for smaller, first-time borrowers with 10 or fewer employees, or loans less than $250,000 in low-income areas.
The remaining amount of funds will go towards PPP 2nd Draw, where $25 billion is allocated for second draw PPP loans for smaller borrowers with 10 or fewer employees, or loans less than $250,000 in low-income areas.
- Less than 300 Employees
- Has or will use a full amount of PPP 1st draw (this prevents someone applying for PPP 1st draw to immediately apply for 2nd draw)
- 25% reduction in gross receipts during any calendar quarter in 2020 compared to the same calendar quarter in 2019
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A few weeks ago, the Biden Administration passed new legislation helping Schedule C’s and Independent contractors with the ability to gain more PPP funding
Today March 30, 2021 President Joe Biden signed the PPP Program Extension, postponing the deadline to May 31, 2021. How does this affect you?
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