Second Round of PPP Funding - SBA Application Released

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The SBA Form 2483-SD (Second Draw) was released by the SBA on Friday, January 8th. This form can be found here on the SBA website.

This application is different from the initial SBA Form 2483 that was used during the first round of PPP funding.

A few items to note regarding this second round of PPP funding:

  • Those who did not receive a PPP loan the first time around may submit loan applications Monday, Jan 11; second draw borrowers may submit loan applications this Wednesday, Jan 13

  • 100% of initial PPP loans must be expended on allowable costs before the second draw is released

  • In order to qualify for PPP round two, total revenue, support, and other income must have decreased by at least 25% during at least one calendar quarter in 2020, compared to that same quarter in 2019; an annual test may also be used (do not include any forgiveness of the first round of PPP funding in your total revenue/support/other income amount)

  • For loans above $150,000, documentation must be submitted to substantiate the revenue/support/other income reduction of 25% or more

  • 8-week or 24-week covered periods are allowed

  • Expanded expenditure categories include operations expenditures (including software and cloud computing), property damage costs, supplier costs, and worker protection expenditures (including protective equipment and adaptive investments)

  • Entities categorized under NAICS code 72 (restaurants, cafes, hotels, bed and breakfasts, food contractors, etc) may use 3.5x average monthly payroll and may have more than 300 employees; others will use 2.5x average monthly payroll and must have 300 or fewer employees

  • The deadline to apply for round two is March 31, 2021, assuming the $284 billion in approved funding does not run out before then.

  • 100% guaranteed by the SBA; therefore, no collateral or personal guarantees required; 1% interest rate, 5-year maturity

  • Forgiveness rules appear to be very similar to that of the initial round of funding

A nonprofit-specific note: 501(c)(6) organizations are eligible for round two if the organization does not receive more than 15% of its receipts from lobbying, lobbying activities do not comprise more than 15% of activities, and the cost of all lobbying activities conducted by the organization did not exceed $1M during the most recent tax year ended prior to Feb 15, 2020. These organizations were barred from participating in the first round.

For nonprofit organizations connected to for-profit businesses that also receive PPP funding, this law (H.R. 133, Consolidated Appropriations Act, signed by the president on 12/27/2020) essentially overrules IRS Notice 2020-32, which would have disallowed deductions for expenses paid with PPP loan funds that were subsequently forgiven. While this could potentially affect 990-T filings insofar that all qualified deductions are still allowed, this is predominately a for-profit entity issue.