A Second Wave of PPP Loans Are Inbound: Here’s What Small Business Owners Need to Know

PPP Loan


Nationwide, small businesses are struggling during the pandemic. Now, after the December 27th approval of a $900B COVID-19 Economic Relief Bill, many small business owners are looking for information. The second relief bill will help small businesses through Paycheck Protection Program (PPP) loans. (Sources: White House)


Overall, the program will distribute $325B. In light of the bill’s approval, small business owners are wondering what they need to know. (Source: House of Representatives)

Key Updates and PPP Requirements


The COVID-19 Economic Relief Bill has changed the PPP. In particular, here are some of the most important questions:

How much can my small business withdraw?


Small businesses can withdraw 2.5x their monthly payroll costs, but cannot exceed $2M.


Another key point is that restaurants and hospitality businesses can withdraw 3.5x their payroll costs.

Am I eligible to apply?


Businesses with an initial PPP loan can still apply for a second loan. They must use their entire initial advance. Similarly, they must have fewer than 300 employees. Also, they must demonstrate a revenue decrease of 25%.

What are the loan requirements for first-time borrowers?


At this time, businesses with fewer than 500 employees can apply. Additionally, sole proprietors, nonprofits, and foodservice businesses can apply.

Will I be eligible for loan forgiveness?


Loan forgiveness is for utilities, payroll, rent, mortgage interest, supplies, operating costs, and PPE. Also, at least 60% of the loan must be for payroll.

Will my expenses be tax-deductible?


Superseding previous IRS rules, all compliant expenses are tax-deductible.


Applicants must fill out the SBA Borrower Application Form. Afterward, they must work with a federally insured credit union or depository institution.

PPP Loan Pros and Cons


Before applying for a PPP loan, small business owners should consider their timeline and goals. Some pros and cons include:




Small business owners could pay nothing back. They must, however, follow the bill’s regulations.

Low-Interest Rate


If the loan needs to be repaid, borrowers will pay a 1% interest rate. Subsequently, the borrower will repay for either 2 or 5 years. Specifically, loans that are withdrawn before or after June 5th have different payback dates. (Source: SBA)

No Collateral


At this time, officially recognized small business owners do not require collateral for a loan.



Usage Limitations


Borrowers must spend on only approved expenses. Additionally, expenses are subject to auditing for forgiveness.

Time Delays


Similar to the first relief bill, small business owners may end up waiting several weeks to receive their loan. As a result, delays could be costly.

Withdrawal Limitations


Small businesses can only withdraw 2.5X of monthly payroll expenses, which may not be enough. (Source: SBA)

Lessons from the first PPP


Small business owners can learn from the first relief bill. For example, many small businesses waited weeks to receive funding. Additionally, some didn’t receive their loan at all. Consequently, small business owners may face similar delays or non-funding. (Sources: SBA PPP Report; Kiplinger). Likewise, small business owners are considering Merchant Cash Advances (MCAs) for fast approval and reliable funding.


Feel free to reach out with questions about the COVID-19 Economic Relief Bill. We are also available for more information about MCAs. Get in touch with our dedicated support team using our contact page.


We wish you the best of luck throughout the pandemic.

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