Does PPP 1 Loan Need Forgiveness to Get PPP 2 Second Draw Loan?
Hello from FreedomTax accounting; we are an accounting firm where we have been providing quality tax and accounting services now for over 20 years. We wanted to do this quick video to answer one of the most common questions we get in our office regarding applying for the second draw of PPP loans.
And that’s if you need to get your first PPP loan forgiven before applying for the second PPP loan. So that’s the question we’re going to answer in this video. We are recording this video on January 13th, and we always emphasize the date of the recording on any video relating to the PPP program because this loan is constantly changing. The rules are constantly changing.
So there may be things we discuss in this video that may change in the future. So we suggest that you subscribe to our channel that way. You’re always up to date with the most current and correct information regarding these SBA loans. And if you’re new to this channel, we provide strategies for small business owners so they can achieve their financial goals.
One of the most common questions we get in our office relating to the PPP second draw loan program is, do I need to have my first PPP loan forgiven to apply for the second PPP loan? And the answer is no; you do not. Okay. So that’s good news because, for many of you that received their first PPP up to this date, you still have not received forgiveness.
Okay. It’s the forgiveness process that may take a while. So it’s good news that you do not need to have your first PPP loan forgiven to apply for the second PPP loan. Remember that? To get the second draw loan of PPP. You only have to meet three eligibility requirements. The first is that you have received a first PPP loan and used the funds or will use the funds accordingly.
If you did not get a first PPP loan, you could not apply for the second PPP loan, but the PPP one. Is now available again. So if you did not get a PPP one loan, you could apply for it directly under the first PPP loan rules. Okay. So that’s good news for businesses that did not get their first PPP. It is now open.
And you can apply for it as well not, but to get the second PPP draw loan, you must have received the first PPP. The second eligibility requirement is that you cannot have more than 300 employees. And most importantly, you have to show that you had at least a 25% reduction in revenue. Okay. Of compare comparable quarters of 2020 compared to 2019.
Okay. Now for businesses that are getting a PPP, two loans, that’s $150,000 or less at time of application, you do not need to show documentation to show the revenue reduction, but you will have to offer. Proof of their revenue reduction requirement when you apply for forgiveness. Okay. And if you do not know how to calculate or how to find out if you can meet the Revenue reduction requirement.
We did a video yesterday on exactly how to calculate and with examples and the formula, and there are five ways to meet the revenue reduction requirements, so if you haven’t seen it. What click this link here at the top or we’re going to put a link in the description below on this video, where we emphasize and teach you how to calculate if you meet the revenue reduction requirement.
Okay. So remember, a lot of people are calling our office if. To see if we are offering services to apply for the PPP loans. And yes, if you’re a business owner and you want us to use or make the PPP loan application for you, we are offering those services. Now, if you like us to do the PPP too, Application for your business.
We will have to do your 2019 and 2020 accounting. Why? Because we would need to certify that your business had and meets the 25%—revenue reduction requirement. And the only way we can certify it is if we do the accounting. We are also providing consultations regarding PPP one, PPP two, E I D L loan programs.
You can call us at 407-502-2400 to set up your consultation. And remember, we are a full-service accounting firm where we are authorized to do personal and business taxes for businesses and individuals. That is in any of the 50 US States. So we can help you with your tax preparation and your business tax preparation.
Okay. Thank you for watching this video; remember to subscribe to the channel and share it with other business owners and watch this suggested video. We tell you the good news that the PPP loan program will not affect your business taxes. Okay. Thank you for watching.
God bless you. Bye-bye.