First, you should know that if you took a first-round PPP loan that did not exceed $150,000, SBA has just released a simplified forgiveness form-just one page with key information, but with no requirement to document payroll or other costs (although that documentation should be retained in case it is requested in the future). The form is called PPP Loan Forgiveness Application Form 3508S. It may be used for first and second round loans.
If you took an original PPP loan and spent it all on allowable expenses, you can apply for a second round loan.
However, to qualify for a second round loan, you must have been adversely affected by the pandemic and this is measured by a decline in your gross receipts.
The maximum loan amount for second round loans is based on 2.5 times the average monthly qualifying costs for payroll, payroll taxes, and fringe benefits, with an overall maximum of $2 million.
Applicants for second round loans must have no more than 300 employees and must have suffered a decrease in gross receipts of 25% or more in any quarter from 2019 to the same quarter 2020. Alternatively, a decrease of 25% for the full year will also qualify.
Unlike businesses, nonprofits use amounts collected to determine whether they had a 25% decrease. This can be beneficial because a timing change could result in a qualifying decrease.
Contributions as well as funding and revenue are all included as amounts collected for nonprofits. PPP loan proceeds are not included.
SBA has guidance for organizations that were not in operation for a full year in 2019.
If you did not take an original PPP loan, you can apply for an initial loan under the new program.
The calculation for first round loans is essentially the same as described above for second round loans, with an overall limit of $10 million.
As in the past, first round loan borrowers need to maintain employee and compensation levels and spend the proceeds on payroll and other eligible costs such as mortgage interest, rent, utilities, and worker protection costs related to Covid-19.
In some circumstances, organizations are allowed to modify their first round loans if they did not receive all they were eligible for.
Either first or second round loans must be applied for by March 31, 2021. These loans will be made through banks.
SBA and the AICPA have extensive guidance on the loan process.