Second Round of PPP Reopens: What You Need to Know

Second Round of PPP Reopens: What You Need to Know

January 14, 2021 | BankingFocus-Banking Focus


 What you need to know...

As you may have recently heard, the Economic Aid Act became law on December 27th. Last Friday SBA published final rules regarding a new round of PPP (Paycheck Protection Program) funds allocated with this bill. There are many similarities to the first round that became available through the original CARES Act last April, but there is one significant difference which includes a new payroll cost calculation for farmers and ranchers receiving their first PPP loan. Previously, the eligible loan amount was based on the net profit appearing on line 34 of the Schedule F. With round 2, you may use Gross Income in line 9 of your Schedule F, from either 2019 or 2020. 





Step 1: Find your 2019 or 2020 IRS Form 1040 Schedule F line 9 gross income (if you are using 2020 and you have not yet filed a 2020 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, you are not eligible for a PPP loan.

Step 2: Divide the amount from Step 1 by 12.

Step 3: Multiply the average monthly gross income amount from Step 2 by 2.5.

Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and ending on April 3, 2020 that you seek to refinance. Do not include the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).

You must provide the 2019 or 2020 (whichever you used to calculate loan amount) Form 1040 Schedule F with your PPP loan application to substantiate the applied-for PPP loan amount and a 2019 or 2020 (whichever you used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that establishes you are self-employed. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.


Gross Income on Line 9 is $150,000 becomes reduced to $100,000.
$100,000/12 = $8,333.33 * 2.5 = $20,833 maximum forgivable loan amount.

*If you have employees, additional calculations may be necessary.


If you have already received a PPP loan, the new bill now allows for a recalculation of the loan amount if the new calculations determine a higher initial loan amount for the 1st draw.

You may qualify for a 2nd draw as well. Additional details on those 2nd draws have yet to be released by SBA as of the date of this publication although it is believed that certain eligible borrowers that previously received a PPP loan will be able to apply for a Second Draw PPP loan with the same general loan terms as their First Draw PPP loan. Second Draw PPP loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, utilities, rent and certain supplier costs and expenses for operations.

Please feel free to begin to compile your quarterly profit and loss statements or other records which would indicate gross sales by quarter for 2020 and 2019 to show the 25% reduction.

We are expecting the SBA application portal to open on Friday, January 15th to submit applications. Please reach out to your Security Bank lender with any additional questions you may have and/or assistance with completing your application.


You are generally eligible for a Second Draw PPP loan if you meet each of the three following criteria :

Previously received a PPP loan and will or have used the full amount only for authorized purposes.

Have no more than 300 employees. 

Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.