Media | January 14, 2021

SBA PPP Round 2 Guidance

On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021 (CAA) into law. A significant revision in this law involves extending and expanding an existing provision from prior 2020 Federal COVID-19 legislation regarding the employee retention credit and paycheck protection program.

The CARES Act passed in March 2020 established the following two incentive programs that provide funds to businesses allowing them to keep employees on the payroll through the pandemic:

  1. The Paycheck Protection Program (PPP)
  2. The Employee Retention Credit (ERC)

On January 7, 2021, the U.S. Treasury Department announced that it will re-open PPP funding the week of January 11, 2021. This will be for new borrowers and some existing PPP borrowers. The program will initially be open to community financial institutions (CFIs) first and then to all lenders after this first draw.

Highlights for Round 2 of the Paycheck Protection Program (PPP)

  • $284.45 billion allocated to second round funding of PPP loans.
  • Cannot employee more than 300 employees – more flexibility for seasonal employees.
  • Have used all or will use all their first round PPP loan prior to receipt of second round funds.
  • Must demonstrate at a minimum a 25% reduction in gross receipts in the first, second, or third quarter of 2020 compared to the same quarter of 2019. There are provisions for businesses that were not in operation during 2019.
  • Loans of $150,000 or greater must provide documentation of the reduction in revenue. Example forms could be income tax forms or quarterly financial statements or bank statements. No specific guidance on this point at the time of the update.
  • Expansion to allow certain nonprofit organization to be eligible – for example 501(c) (6)s, housing cooperatives and direct marketing organizations.
  • May borrow up to 2.5 times average monthly payroll, like PPP round 1. Hotels, restaurants, and other organizations with NAICS code beginning with 72 may apply for up to 3.5 times.
  • Second round funds are limited to $2 million.

Additional modifications to the PPP Round 2

  • Covered operations expense may include:
    • Payment for software, cloud computing, and other human resources and accounting needs
    • Cost for property damage due to public disturbances occurring during 2020 not covered by insurance
    • Expense to a supplier for a contract, purchase order, or order for goods in effect prior to taking out the PPP loan that are considered essential to operations at the time of the expense.
    • Personal Protective equipment and adaptive investments to comply with federal health and safety guidelines or any equivalent State or local guidance related to COVID 19 between March 1, 2020 and the end of the national emergency declaration.
  • 60%/40% split for cost allocation between payroll and non-payroll continues. However, group insurance payments now maybe included as the payroll cost. Including vision, dental, disability and life insurance plans.
  • Covered period can be elected by the borrower for any period between 8 and 24 weeks after the PPP loan is originated. Not limited to either or as with PPP Round 1.
  • There will be an SBA Form 2483-D (Paycheck Protection Program Second Draw Borrower Application Form) or the lender’s equivalent form for the application process.
  • Simplified process for forgiveness of loans of $150,000 or less.
  • Borrowers in bankruptcy will be eligible to apply for PPP loans. These new loans will be treated in the borrower’s bankruptcy case as administrative claims and to the extent not forgiven, must be paid in full in any Chapter 11 cases and are not subject to “cram down”.

NOTE – We expect this webpage will be revised accordingly with the revisions in the future and this not to be considered an all-inclusive list of the updated legislation. For additional information on the SBA’s assistance visit or

Please contact the following as you have questions:

Michael Johnston
Email Michael at
Call at 770.461.1115

John Corn
Email John at
Call at 404.214.1301

Chris Bailey
Email Chris at
Call at 770.422.0598

Kirk Jarrett
Email Kirk at
Call at 706.237.7990

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