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Second Round of Paycheck Protection Program Funding



Rödl & Partner Tax Matters Vol 2021-1, published January 15, 2021


As part of the Consolidated Appropriations Act, 2021, $284.5 billion was made available for a second round of Paycheck Protection Program ("PPP") funding.


Eligible Borrowers

Eligible first-time borrowers can apply for a PPP loan up to $10 million and are defined as follows:


In operations on February 15, 2020 and from one of the following groups:

              • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans,
          • Sole proprietors, independent contractors, and eligible self-employed individuals, OR
          • Other designated entities including not-for-profits (including churches), Section 501(c)(6) business leagues, certain news organizations, and certain accommodation and food services operations


For applicants seeking first-time PPP loans, the total number of the foreign and domestic employees of the U.S. applicant and its foreign and domestic affiliates cannot exceed 500, unless the applicant meets an applicable alternative SBA industry size standard.


Eligible borrowers can apply for a second PPP loan up to $2 million and are defined as follows:

  • Have 300 or fewer employees,
  • Used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be disbursed and have spent the full amount of the first PPP loan on eligible expenses, AND
  • Experienced a revenue reduction of 25% or more in all or part of 2020 compared with all or part of 2019. This is calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019. A borrower that was in operation for all four quarters of 2019 can submit copies of its annual tax forms that show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.

For both new and second loans, the same affiliation rules that applied during the first round of PPP loans continue to apply. In addition, the economic necessity certification is still required.


Similar to the first round of PPP loans and subject to the above listed limits, the maximum loan amount is computed as 2.5x average monthly payroll expenses in either the year prior to loan origination, calendar year 2020, or calendar year 2019.


The following criteria will deem a borrower ineligible from applying for a second PPP loan:

  • An entity created in or organized under the laws of China or Hong Kong, or an entity that has significant operations in China or Hong Kong, owns or holds at least 20% of the U.S. borrower, directly or indirectly, (including as equity shares or a capital or profit interest in an LLC or partnership), or
  • The U.S. borrower has as a member of the board of directors a person who is a resident of China, or
  • the U.S. borrower is primarily engaged in political or lobbying activities.

Loan Forgiveness

The new and second loans can be forgiven if the funds are used on the following eligible costs: payroll, rent, covered mortgage interest, and utilities, covered worker protection and facility modification expenditures, covered property damage costs, covered payments to suppliers and payments for business software or cloud computing services that facilitate business operations, product or service delivery, and a number of back-office functions, including accounting.


To be eligible for full loan forgiveness, PPP borrowers must spend no less than 60% of the funds on payroll over a covered period of their choice between eight and 24 weeks.


Application Availability

The application window for new and second PPP loans will open Friday, January 15, 2021 for lenders with $1 billion or less in assets. The program will begin accepting applications for first- and second-draw loans from large lenders on Tuesday, January 19, 2021.


Please contact your Rödl & Partner representative for additional information and assistance.


This publication contains general information and is not intended to be comprehensive or to provide legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Consult your advisor.

We have made reasonable efforts to ensure the accuracy of the information contained in this publication, however this cannot be guaranteed. Neither Rödl Langford de Kock LP nor any of its subsidiaries nor any affiliate thereof or other related entity shall have any liability to any person or entity which relies on the information contained in this publication, including incidental or consequential damages arising from errors or omissions. Any such reliance is solely at user's risk.

Any tax and/or accounting advice contained herein is based on our understanding of the facts, assumptions we have been asked to make, and on the tax laws and/or accounting principles in effect as of the date of this advice. No assurance is given that the conclusions would be the same if the facts or assumptions change, or are not as we understand them, or that the tax laws and/or accounting principles will not change subsequent to the issuance of these conclusions. In addition, we do not undertake any continuing obligation to advise on future changes in the tax laws and/or accounting principles, or of the impact on the conclusions herein.

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Copyright © January 2021 Rödl Langford de Kock LP
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