January 11, 2021 | Posted in:

PPP Round 2: What You Need To Know

On December 27, 2020 the Consolidated Appropriations Act 2021 was signed into law. One of the main elements of this legislation is $284 billion allocated for a revived Paycheck Protection Program (PPP) aimed to help small businesses as the COVID-19 pandemic continues. Just last week, the SBA and U.S. Treasury released updated guidance on the program for both first-time borrowers and for businesses seeking a second loan. Below is what you need to know.

Note: The program is opening THIS WEEK for first draw and second draw loans. Application start date varies by lender. It is important to consult with your CPA and lender BEFORE applying.


Go to our Infographic


What to Know

  • To be eligible for the second draw loan, you must have 300 or fewer employees and show a revenue reduction of 25% or more in all of or in at least one quarter of 2020 compared with the same period of 2019.
  • If you received a PPP loan the first time around, you can re-apply for a second draw loan if you have used the full amount of the first PPP loan on eligible expenses before the second loan is expected to be disbursed.
  • Applications start as early as the week of 1/11/21. Deadline to apply is currently 3/31/21 (or if funds are exhausted). Check with your CPA and lender for the exact application window.
  • The first two days are reserved for community financial institutions serving minority- and women-owned businesses. Specifically, Monday is for their first-time borrowers while second-time borrowers can begin Wednesday. The window for other lenders and borrowers will open “shortly thereafter.”
  • New targeted $10,000 EIDL grants for eligible small businesses in low-income communities and suffered an economic loss greater than 30% (Application portal is expected to open 1/17/21).
  • Billions are being set aside for live event venues, minority-owned businesses, community financial and small depository institutions, microloans, and small businesses (under 10 employees) in low-income areas seeking less than $250,000.


What’s Different


PPP: Second Draw PPP: First Draw
Federal funds $284 billion in available funds. $525 billion in available funds.
Maximum loan $2 million at 1% interest rate. $10 million at 1% interest rate.
Loan calculation Loan amount is 2.5x average monthly payroll costs. Hotels and restaurants (NAICS code 72) can be up to 3.5x monthly payroll Loan amount is 2.5x average monthly payroll costs for all borrowers.
Business eligibility 300 or fewer employees (per physical location). Includes sole proprietors, independent contractors and self-employed. 500 or fewer employees (per physical location). Includes sole proprietors, independent contractors and self-employed.
New restrictions Primarily, publicly traded companies and businesses controlled, either directly or indirectly, by government officials (or their spouses) are not eligible. Originally no restrictions on publicly traded companies or government lobbying.
Not-for-Profit eligibility Eligible non-profits include 501(c)(3), 501(c)(19), AND 501(c)(6) not-for-profit organizations such as business groups and chambers of commerce. Eligible non-profits originally only included 501(c)(3) agencies and 501(c)(19) Veterans organizations, but now allows 501(c)(6) organizations.
Retention tax credit Can claim the employee retention tax credit. Previously could not claim the employee retention tax credit. New legislation now permits a business to have a PPP loan and claim the credit. Past payroll returns may be amended
New eligible expenses Forgivable expenses include payroll, rent, mortgage interest, utilities, AND:
• COVID-19 safety compliance expenses such as worker protection and facility modifications (PPE, plastic dividers, etc.);
• Unreimbursed property damage costs from 2020 looting;
• Essential supplier expenses;
• Payments for business software or cloud computing service that facilitates: Business operations; product/service delivery; HR; payroll processing, payment and tracking; sales and billing functions; and tracking inventory, supplies, records, and business expenses.
Originally, forgivable expenses only included payroll, rent, mortgage interest, and utilities. Now includes all of the expenses listed in the left column.


What’s the Same

  • 1% fixed interest rate (non-compounding and non-adjustable).
  • Business must have been operational before 2/15/2020 and remain operational.
  • At least 60% of funds must be spent on payroll between 8-24 weeks.
  • Expenses paid with PPP funds that are forgiven will be tax-deductible.
  • Lenders may not charge a yearly fee or prepayment penalty and must not require collateral or a personal guarantee.


Application forms

The new application forms for first draw and second draw PPP loans were released late on Friday, January 8, 2021. For your reference, you can view the applications here:

PPP First Draw Application [PDF]


PPP Second Draw Application [PDF]


What to do Next:


Consult with your CPA and your lender. There is a lot of information that may be specific to your industry or business type.



Gather your payroll and benefit costs. This includes Form 941 and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 used to calculate the loan amount, and backup for any retirement and health insurance contributions. If you are applying with the same bank for a second draw based on 2019 payroll, you do not need to provide information again.


Prepare your proof of revenue reduction. This includes your annual tax forms (if business was in operation for all four 2019 quarters) or gross receipts from sales of products or services, interest, dividends, rents, royalties, fees, or commissions for a quarter in 2019 vs. 2020 (Do not include PPP loans and EIDL advances.).




After application approval, be organized for forgiveness. Have a reliable tracking and organization system in place to maintain accurate records when it comes time for the forgiveness application.


Key Facts Infographic

We have prepared a one-page summary with a high-level overview of the new PPP changes and a comparison of the first draw vs. second draw.

2021 Paycheck Protection Program Round Two How to Apply

Paycheck Protection Program: 2021 Updates and Key Facts About the Second Draw

Access the PDF here:

Download Infographic [PDF]

Disclaimer: This is a high-level overview current as of January 11, 2021. Keep in mind this information is ever-changing. Consult with your CPA and lender with the most up-to-date information applicable to your individual situation.


Contact Us

Alloy Silverstein’s accounting and advisory team remains here for you throughout 2021. If you have any questions or concerns, contact one of our professionals or you may also email


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