On March 30, President Joe Biden signed into law the PPP Extension Act of 2021, H.R. 1799 extending until May 31, 2021, the application deadline to participate in the “Second Draw” Payroll Protection Program loans.
The lender financial institution should have the appropriate forms for the application. The list of approved lenders is available online with the Small Business Administration’s lender match tool. Accounting firms can also prepare and process applications using the CPA.com CPA Business Funding Portal.
Generally, the Second Draw maximum amount is equal to 2.5x the average monthly 2019 or 2020 payroll costs up to $2 million. For businesses in the Accommodation and Food Services sector, the 2.5x average monthly payroll is increased to 3.5x (based on NAICS 72 classification).
It is important to remember that the PPP loans can be forgiven if the employee and compensation amount are maintained and at least 60% of the proceeds are spent on payroll costs. The borrower must apply through the financial institution that managed the loan for the forgiveness within 10 months after the final day of the covered period.