Paycheck Protection Program, Round 2

On December 21, 2020, Congress passed another COVID-19 relief bill, which is awaiting signature by the President.  The legislation contains several provisions related to the PPP Loan Program, including expanding the scope of forgivable expenses and clarifying PPP tax issues.  This Client Alert summarizes key parts of the relief bill related to PPP Second Draw Loans, permitting certain prior borrowers of PPP Loans to request a second loan.  


Generally, borrowers must meet the following requirements:

  • Certify that they have used or will use the funds from the first PPP Loan before the expected date of the Round 2 Loan disbursement;
  • Have 300 or fewer employees;
  • Have had a reduction in gross receipts of 25% or more for any calendar quarter in 2020 compared to the same quarter in 2019; and
  • No eligibility exclusions apply to the borrower, such as: certain foreign ownership may trigger exclusion, entities primarily engaged in political or lobbying activities are ineligible, and businesses that receive a grant under the Economic Aid to Hard Hit Small Businesses, Nonprofits, and Venues Act (i.e. a Shuttered Venue Grant) are ineligible


  • A Round 2 loan cannot exceed $2 million
  • Just as in Round 1, a borrower can request a loan for up to 2.5 times average monthly payroll
  • Seasonal Employers (a now defined term under the relief bill) can request a loan for up to 2.5 times average monthly payroll over a 12-week period of the employer’s choosing between February 15, 2019 and February 15, 2020
  • For borrowers in an NAICS industry category code starting with 72—Accommodation and Food Services (i.e. hotels and restaurants), the borrower can request a Round 2 loan for 3.5 times average monthly payroll

The relief bill makes several other changes to the PPP Program, including mandating a streamlined forgiveness process for loans up to $150,000.  The SBA is required to issue a 1-page forgiveness application within 24-days of enactment of the relief bill.  Under the streamlined process, borrowers will have to provide the amount of the total loan, an estimated amount of the loan spent on payroll costs, and a description of the number of employees the borrower was able to retain because the loan.  The borrower will not have to provide supporting documentation, but will have to retain the documentation in its records. 

We will cover other changes to the PPP Program by the relief bill in a future Client Alert.

Please contact a MacDonald Illig attorney if you have any questions regarding a Round 2 PPP Loan or any other aspect of the new relief bill.