The Second PPP Loan: What You Need to Know

In an effort to encourage entrepreneurship, the SBA has closed the PPP to new loan applications as of Tuesday, May 4. It does have a reserve of funding available to community financial institutions that lend to businesses owned by women, minorities, and underserved communities. 

Applicants who have already submitted their loan application, however, do not guarantee funding. Alternatively, there is a reserve of funds for applications not reviewed by the SBA.

What’s updated for the second round of PPP?

The first PPP loan you can apply for in 2021 may be available if you did not receive one in 2020.

If your business suffered a revenue loss in 2020, you may be eligible for a second PPP loan if you received a PPP loan in 2020.

You will still have to meet the same terms whether you take out your second PPP loan or your first PPP loan.

Similarly to the first PPP loan, the second round of PPP loans are also fully forgivable if they meet the forgiveness guidelines, which stipulate that at least 60% of the loan must be allocated to payroll.


These loans carry an interest rate of 1% and a term of five years. You are required to make payments for ten months following the end of the covered period, or until you receive a forgiveness verdict.

Who is eligible for a PPP loan in 2021?

  • Until February 15, 2020, your business was in operation.
  • Your business remains open and operational.
  • A maximum of 500 people work for you
  • You can have no more than 500 employees in each of your locations if you have multiple locations.
  • Your business requires a PPP loan in light of current economic uncertainty.

Second draw PPP loans

If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021.

  • Your first PPP loan has been used up.
  • Until February 15, 2020, your business was in operation.
  • You are still in operation.
  • A maximum of 300 people works for you.
  • If you operate multiple locations, you must keep your employee count under 300 per location.
  • If gross revenue drops 25% or more, you can demonstrate it.

Showing a 25% or greater reduction in revenue

A 25% or greater reduction can be shown in one of two ways:

  • Using a tax return to compare your annual receipts from 2020 to 2019
  • Your gross revenue in the same quarter of 2020 compared to the same quarter in 2019

Profitability is the amount of money you have earned in a business over a period of time, including sales, interest, dividends, rents, royalties, fees, commissions, reduced by losses, allowances, and returns.

The Q2 2020 gross revenue has to be at least $15,000 in order for a business to use the Q2 2019 gross revenue of $20,000.

How Bench can help

In order to accurately represent a 25% reduction in revenue, comprehensive bookkeeping is imperative. Bench can complete your 2019 and 2020 books, as well as create the profit and loss statements.

In addition to showing your net profit and payroll expenses, having your books done by Bench also determines your eligibility for a PPP loan.

Additionally, you can submit these documents. If your lender requires them, you can submit them with your loan forgiveness application.

When do PPP applications open again?

PPP loan amount calculation

A PPP loan is calculated exactly like the original PPP loan. You can receive a loan of 2.5 times your average monthly payroll cost. Your average monthly payroll cost can either be determined as follows:

  • 2020 is a calendar year.
  • 2019 is the upcoming calendar year.
  • A year before applying for a loan

Food and accommodation businesses

A greater loan amount can be offered to food and accommodation businesses. Organizations with NAICS codes beginning with 72 qualify. You can check to see what the NAICS code of your business is on a website like

This loan is equal to 2.5 times your average monthly payroll costs, regardless of whether the average payroll is calculated for the calendar year before the loan application, for the calendar year 2020, or for the calendar year 2019.

The maximum second draw loan amount for these businesses is 3.5 times their monthly payroll costs.

Seasonal businesses

To qualify as a seasonal business, you must satisfy one of the following criteria:

  • A calendar year does not include more than seven months of operation.

  • When you earned $100,000 from January through June, you earned no more than $33,330.00 from July through December (e.g. if you earned $100,000 from January through June, you earned no more than $33,330.00 from July through December).

The maximum amount of a seasonal business loan is 2.5 times its average monthly payroll cost. The average monthly payroll cost can be calculated over any 12-week period from February 15, 2019 to February 15, 2020.

A PPP loan for the first time or the second time is treated the same.

Partnerships without payroll

In order to determine the average monthly distributions, partnerships take the 2019 or 2020 Schedule K-1 distributions, multiply them by 0.9236, and divide them by 12.


Sole proprietors and independent contractors

Since March 3, 2021, sole proprietors and independent contractors determine their PPP loan amount using their gross income. If they do not run payroll, they use the number on line 7 of their 2019 or 2020 Schedule C. Divide this number by 12 and multiply by 2.5 to find your PPP loan amount.

If you are running payroll, subtract the payroll costs in lines 14, 19, and 26. You can use a maximum of $100,000. Divide this number by 12 and add your average monthly payroll expense. Multiply this number by 2.5 to calculate your PPP loan amount.

The expansion of PPP eligible expenses

Payroll costs, rent, and utilities expenses were eligible expenses for the first rollout of PPP loans in 2020.

With the stimulus bill’s second version, you can now use your PPP loan for the following additional expenses:

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