When to Apply for PPP Loan 2? | Getting PPP 1 and PPP 2 in 2021 | Wait 8 Weeks?
As of March 30, 2021, the SBA says you have to wait at least 8 weeks from getting your PPP first draw funds to be able to apply for a PPP loan second draw, but we have seen otherwise.
This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Freedomtax Accounting and Multiservices Inc. are providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. Freedomtax Accounting and Multiservices Inc. or its members cannot be held liable for any use or misuse of this content.
Requirements if You Already Have a PPP1 Loan
To get a PPP2 loan from an approved SBA Lender, if you already have an existing PPP loan (“PPP1”), you:
Must have fewer than 300 employees, including “affiliates” (for hotels and restaurants this limitation is calculated on a per-physical-location basis).
Must be in operation on February 15, 2020.
Cannot be publicly traded, be primarily engaged in political advocacy or lobbying, or have significant ownership by residents of China (PRC).
Must have used (or have a plan to use) all of their original PPP1 loan for approved expenses.
Must be able to show a 25% reduction or more in gross revenue in any quarter in 2020 compared to the same quarter in 2019. New businesses, that were not in business for the entire 2019 year, but were in business before February 15, 2020, can use quarterly revenue for a portion of the year.
What Are The Major Changes to The PPP Loans?
As with PPP1 loans, PPP2 loans give qualified businesses a loan of up to 2.5 times their average monthly payroll costs, either determined by the calendar year in 2019, 2020 or by the 12 months prior to the date the application is submitted. Hospitality or food service businesses with a NAICS code beginning in 72 may receive up to 3.5 times their average monthly payroll costs.
However, one of the biggest changes is the maximum loan amount, which is down from $10 million in 2020 to $2 million for second-time loan recipients.
How soon can I apply for the second PPP loan after I get my first PPP loan? That’s what we’re going to answer in this video. Hello from Freedom Tax Accounting, we’re an accounting firm where we have been providing quality tax and accounting services now for over 20 years. If you are new to this channel, we provide strategies for small business owners, so they can achieve their financial goals.
Although for the last couple of months we have been concentrating on providing information about the PPP and the EIDL loan programs. Today we are recording this video on March 30th and we always emphasize the date of the recording on any video relating to the PPP loan program because this program is constantly changing. So, that’s the importance of subscribing to our channel, that way you’re always up to date with the most current and correct information relating to the PPP loans.
Now one of the most common questions we get here in our office is, “Okay so I got my PPP first draw. How soon can I apply for my PPP second draw?” And we have been holding off on answering this question in a video on YouTube because we have seen things that are conflicting okay. Let me explain. The official answer from the SBA is that in order to apply for your second PPP loan, you have to wait at least eight weeks from the date you got the PPP one funds. Why? Because the SBA said it has always said that “you have to certify that you have already used your PPP1 funds to get PPP2”.
In every PPP loan rule, you have to use your PPP loan funds in at least “eight weeks”, from eight weeks all the way to 24 weeks. So, the SBA following that rule has always said okay so you have at the minimum you can use the PPP funds. PPP1 is eight weeks, so you have to wait eight weeks in order to apply for PPP2.
Now the interim final rule that was released on March 17th at least gave us hope saying that you may not have to wait the eight weeks to apply for PPP2. Let me show you. On March 17th, the SBA released this interim final rule okay, where there’s a section that says, who is eligible for a second draw PPP loan and it says, “You have to certify that you have used or will use the full amount of your first draw PPP loan.”
So, in this interim final rule, it doesn’t say that you have to certify that you already used your PPP1 funds.” It says that you are able to certify that you will use them. So, when we saw this, we really thought that SBA was going to open the doors. So, for everyone who got pp1 that they won’t have to wait eight weeks to apply for PPP2.
So, the following day on May 18th the SBA released an updated PPP2 application form; as you can see this was revised on March 18th. So, we thought, wow, they are going to change the application form so you don’t have to wait eight weeks to apply for the second PPP.
But unfortunately, that did not change, because if you see the certification still says, “The applicant received the first draw PPP loan and you have to certify that you have used the full amount of the first draw.” So, this is apparently what the SBA is sticking to that as of today, the SBA is still telling the banks that in order to get PPP2, you have to wait eight weeks from the date that you got PPP1 okay.
Now, remember in order to apply for PPP2 you still have to meet at least a 25% reduction in revenue eligibility criteria okay. Now if you do meet the 25% reduction in revenue criteria, what the SBA is saying is that you have to wait eight weeks from the date you got PPP1. Now that’s what the SBA is saying. We have seen otherwise okay. To be clear, we have not done a PPP2 application under those eight-week periods and gotten it approved.
The PPP2 applications that we have been able to get approved are the ones that we have been able to do after that eight-week waiting period from PPP1. But we are doing a lot of consultations here at Freedom Tax and we have heard many testimonies of people who just received PPP1 and in a week or two, they applied for PPP2 and they got it. So, I would recommend and we recommend here at Freedom Tax that you basically ask your lender.
When I ask these people, “How did you get it?” They basically told us, “I just ask my bank.” Instead of doing the second draw application right then there they first talk to the blender or talk to the bank and they ask. So, apparently, there are some lenders out there that are not waiting for the eight-week waiting period to get PPP2. So, at least here at freedom tax we are going to follow what the SBA says that at least we are going to wait the eight weeks to apply for PPP2. Unless that changes, unless the SBA comes out and publicly gives guidance that you can apply for PPP2 under that eight-week waiting period, okay.
Now the good thing is that the PPP program is going to be extended till the end of May, May 31st. And as of today March 30th, if you still go to the SBA website it still says that the PPP program is ending tomorrow because we still have to wait for the president to sign the PPP extension act into law. But that has already been approved in Congress, it has very already been approved in the house, in the senate.
So, it’s just I would guess um a couple of hours or maybe even tomorrow that the president will sign that into law and the PPP has been extended because even the lenders, even the banks are saying that it’s going to be extended okay.
So, once again the official rule from the SBA says, if you got PPP1 you have to wait 8 weeks to get PPP2. We have not done them to be very clear, but we have heard and heard many testimonies of other persons that have been able to get PPP2 without having to wait eight weeks. So, we suggest just calling your lender. And if your lender says that you have to wait eight weeks, try with another lender. You don’t have to get PPP2 with the same lender you got PPP1, so that’s what we have to say okay.
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