How to Qualify for a Second-Round Paycheck Protection Program (PPP) Loan

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Paycheck Protection Program (PPP) loans have helped many small businesses stay afloat during the COVID-19 pandemic. Luckily, there is a new round of PPP funding available, and many businesses may qualify for a second PPP loan. In this video, Chugh CPAs, LLP Senior Tax Accountant Neha Karnwal provides an informative video overview of how your business can qualify for a second-round PPP loan. 

Businesses that have already taken out a PPP loan are eligible for a second one if they meet all the following conditions:

  • They have used or will use the full amount of the first draw PPP loan on approved expenses only.
  • They have 300 employees or fewer. Restaurants and hotels may have up to 300 employees per location.
  • They can demonstrate at least a 25% reduction in gross receipts between corresponding quarters of 2019 and 2020.

While the eligibility criteria is mostly the same for first- and second-draw PPP loans, there is a reduction in the maximum number of employees allowed. Businesses qualify for first-draw loans with 500 employees or fewer, while second-draw loans are available only to businesses with 300 employees or fewer (or 300 employees per location, for restaurants and hotels).

For businesses that own multiple entities, each business is eligible for a second separate PPP loan if it has a unique Employer Identification Number (EIN).

Similarly, a company’s employees are counted based on the EIN that they are employed under. All employees that work under the same EIN would be counted as employees of the same company. This is important to note for staffing companies that place employees at multiple end-client locations.

For help applying for a second draw PPP loan, or getting your loan forgiven, please contact your trusted Chugh CPAs, LLP professional.