How can I use PPP funds?

Under the Act, PPP loans can be used for the following:

  • working capital or payroll
  • costs related to continuation of group health care benefits during periods of paid sick, medical or family leave, as well as insurance premiums
  • mortgage interest payments
  • rent payments
  • utility payments
  • interest payments on other debt obligations incurred before February 15, 2020, and refinancing an SBA Economic Injury Disaster Loan made between January 31, 2020, and April 3, 2020
  • operations expenses, including software, cloud computing, human resources and accounting needs
  • property damage due to 2020 public disturbances not covered by insurance
  • some supplier costs that were essential to your business operations
  • worker protection expenses like PPE and other COVID-19 adaptive costs

If a borrower uses PPP funds for unauthorized purposes, the SBA will direct the borrower to repay those amounts. If a borrower knowingly uses the funds for unauthorized purposes, the borrower will be subject to additional liability charges for fraud.

How much has to be used for payroll?

It’s still mostly intended for payroll with a 60/40 split, but the eligible expenses have been expanded so you can spend up to 40 percent of the money on more needs.

Can I apply for second draw if I still have funds available from first draw?

PPP Second Draw loans are for borrowers that previously received a PPP loan and have used, or will use, the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP Loan.

Who is eligible for the second draw of loans?

Businesses who qualified for a first draw loan and have been especially hard-hit during the pandemic may qualify for the second draw. Publicly owned companies are not eligible, nor are a few other specialized businesses. Here are the requirements:

  • Borrowers must have no more 300 employees.
  • They must demonstrate at least a 25% reduction in gross receipts during any quarter of 2020 compared to the same quarter in 2019. Special rules apply if the borrower was not in business all of 2019.
  • Loan amounts are up to 2.5 times average monthly payroll costs during the year prior to the loan or the previous calendar year.
  • Many hotels, restaurants and similar businesses may receive up to 3.5 times average monthly payroll costs.

When will I receive an answer about my PPP loan application?

Applications are taking longer to be approved right now – especially for second round PPP loans – for a few reasons:

  • Second round loans are subject to a lot of new, complex SBA regulations, which means new processes, more paperwork and new complicated rules.
  • The SBA will be reviewing these applications very closely before providing a new SBA loan number.
  • If there are any issues with the application, it will get sent back to us for correction.
  • Also, because the calculation of your decline in gross receipts for a second draw loan is dependent on the type of legal entity you are, and because more businesses are now eligible for first draw funding, we have had to make numerous changes to the review process from 2020.

If you’ve already submitted an application and additional information is needed, you should have received an email from us notifying you about the required documentation.

If your application is returned to us after we submit it, we’ll quickly reach out to you address the issue.

Please know that we’re doing all we can to move as quickly as possible. We understand how important this funding is for your business.

*As of 1/27/21, details are subject to change based on additional guidance from the SBA.