SBA Releases Second-Round PPP Application Forms

On Jan 11, 2021, the Small Business Administration (SBA) and Department of Treasury began the process of accepting applications for the second round of the Paycheck Protection Program (PPP2) and released two new forms that reflect the first and second round of eligibility for the program:

• Form 2483 – Paycheck Protection Program First Draw Borrower Application Form
• Form 2483SD – Paycheck Protection Program Second Draw Borrower Application Form

Form 2483 is updated from the initial form used for the original PPP program. Form 2483-SD is a new form intended for qualified PPP borrowers who seek a second draw of a forgivable loan to help them cope with economic difficulties resulting from the COVID-19 pandemic.

The SBA has also made available the following forms regarding PPP forgiveness:

• Form 3508 – Payroll Protection Program Forgiveness Application
• Form 3508EZ – Payroll Protection Program Forgiveness Application
• Form 3508S – Payroll Protection Program Forgiveness Application

Background

The PPP, created as part of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, is designed to help small business owners and other individuals adversely affected by the COVID-19 pandemic. It provides direct government subsidies for payroll, rent and other expenses. Subsidies are in the form of federal loans which can be forgiven if borrowers apply at least 60% of the funds for payroll over a covered period of their choosing between eight and 24 weeks.

The SBA had stopped taking applications for the original $525 billion in forgivable loans in August 2020. In legislation signed into law on December 27, 2020, Congress approved funding for a second COVID-19 relief bill, which provides $284.5 billion in small business assistance. This funding includes $35 billion for first-time loan applicants and $15 billion for community financial institutions aimed at helping underrepresented business owners.

 PPP Borrower Application Forms

The new borrower application forms include instructions on how to calculate payroll costs for first- and second-time PPP borrowers:

• First- and second-time PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020 or the year prior to the loan.
• PPP borrowers with North American Industry Classification System (NAICS) codes starting with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs on second-draw loans.
• The maximum loan amount is $10 million for first-time borrowers and $2 million for second-time PPP borrowers.

Rules for First-Time PPP Loans

• Business must be in operation on Feb. 15, 2020
• 500 or fewer employees
• Includes: sole proprietors, independent contractors and eligible self-employed individuals
• Also includes nonprofits and churches

Rules for Second-Draw PPP Loans

• 300 or fewer employees
• Must have used or will use the full amount of their first PPP loan on or before the expected date that the second PPP loan will be allocated to the borrower
• Business must have experienced a revenue reduction of 25% or more in all or part of 2020 compared with 2019 (per applicable quarter)

The SBA and Treasury also published top-line summaries of the first-draw and second-draw PPP loans and a pair of procedural notices.

• Top-Line Overview of First Draw PPP Loans
• Top-Line Overview of Second Draw PPP Loans
• Procedural Notice – Modifications to SBA Forms 3506, 3507 and 750 CA (PPP only)
• Procedural Notice – SBA Procedural Notice on Repeal of EIDL Advance Deduction Requirement

Just a reminder, ALL CPAs can help you with all aspects of the PPP Program, from applying for loans to calculating forgiveness amount. If you have questions about the PPP program, or how we can help, please contact your ALL advisor or call us at 617-738-5200.