PPP 2021: simplified application, second draw loans added (see new forms here!)

In this 3-minute read:

  • New simpler PPP application form .pdf
  • Second draw loan application (including .pdf)
  • Can I just submit my PPP application .pdf directly do the SBA?
  • How do I qualify for a second draw PPP loan?
  • Do I need to demonstrate a >25% decrease in revenue for a second draw PPP loan?
  • NEW: Application for Schedule C filers using gross income

If you have been waiting to apply for a PPP loan for your business, now is the time! The Paycheck Protection Program under the CARES act has been renewed and re-funded for 2021, and best of all, there’s a new, simplified application form, which you can see embedded in the article below.

There’s also a brand new form for people applying for the new “second draw PPP loan” for those who got funding in the first round during 2020. Certain businesses may qualify for a second round of PPP funding. Read this post to find out if you qualify for a second PPP loan.

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The new PPP loan application form for 2021 (including .pdf)

The good part about PPP 2021 is that the new form is simpler and easier to understand. It tells you everything you need to apply for a PPP loan, and filling out the .pdf application will give you a good idea about how the application process will go with your selected SBA-approved lender.

Here’s what the new PPP application looks like for 2021:

Should I just fill out the PPP application form .pdf and submit it directly to the SBA/government?

No. The SBA doesn’t accept applications directly from borrowers, but rather they open an electronic portal for approved lenders (local banks, community lenders, etc. approved by the SBA to accept PPP loan applications) to submit PPP applications. 

Will my bank simply submit my completed .pdf PPP application to the SBA on my behalf?

They might, but they might also have their own application process, and they may ask for additional documentation that’s not included in the SBA’s .pdf application form. The SBA allows for their approved lenders to determine what the application process will be within certain parameters. 

So, while filling out the .pdf application will give you a good idea about what your lender might require in their PPP application process, that’s no guarantee that the .pdf contains ALL information required by your individual lender. If you need help through the process of applying for your PPP loan, let Womply help! We’ve connected over 200,000 satisfied businesses with SBA lenders and helped them get their PPP funding. 

The new PPP “second draw” loan application form for 2021

The second draw PPP loan is available for businesses that received PPP loans in 2020 if:

  • Your business has 300 or fewer employees, and 
  • Your business experienced a 25% revenue reduction in 2020 relative to 2019 (described further below), and
  • Your business has received a “first draw” PPP loan and has used, or will use, the full amount of the initial PPP funding on or before the expected date on which the Second Draw PPP Loan is disbursed to you, and
  • You have spent the full amount of your first PPP Loan on eligible expenses under the PPP rules. This clarification will help ensure program integrity by preventing borrowers from receiving a second PPP Loan if they have not complied with PPP loan program requirements

There’s a brand new form for people applying for a second draw loan. Here’s what it looks like:

How do I demonstrate a 25% reduction in revenue to qualify for a second draw PPP loan?

The Economic Aid Act provides that, to be eligible for a Second Draw PPP Loan, the borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019. A borrower must calculate this revenue reduction by comparing the borrower’s quarterly gross receipts for one quarter in 2020 with the borrower’s gross receipts for the corresponding quarter of 2019. 

For example, a borrower with gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020 has experienced a revenue reduction of 40 percent between the quarters, and is therefore eligible for a Second Draw PPP loan (assuming all other eligibility criteria are met). 

What if I don’t have quarterly revenue data for my small business? Can I still apply for a second draw PPP loan?

If you don’t have accurate quarterly revenue data demonstrating a 25% reduction in revenue for one quarter in 2020 compared to 2019, you can use your 2020 tax return to demonstrate the 25% reduction, assuming you reported a 25% or greater loss for 2020.

The SBA provides that a borrower that was in operation in all four quarters of 2019 is deemed to have experienced the required revenue reduction if it experienced a reduction in annual receipts of 25 percent or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline. 

My second draw PPP loan is for less than $150,000: What documents do I need to prove my business revenue declined? 

As noted above, for a second draw PPP loan you will need to certify that your revenue declined at least 25% in any quarter in 2020 when compared to 2019. However, it is expected that most lenders won’t require you to provide evidence of this at the time of application, particularly if your loan is for less than $150,000. The government is expected to issue rules later this year that will outline how you will prove your revenue declined, which you will need to do before you request forgiveness on your second-draw loan.

New application form for Schedule C filers using gross income

On March 3, 2021, the SBA released a new PPP application form for sole proprietors, independent contractors, and self-employed individuals who are applying for a PPP using IRS Form 1040, Schedule C. Recent rule changes mean that those applicants may now apply using Line 7 (gross income) of their Schedule C instead of Line 31 (net income).

This is a major update to the program for these types of businesses and individuals, many of whom were ineligible based off of their net income amount, but are now eligible using gross income.

This is the application form for borrowers who wish to apply using gross income from their Schedule C (if you elect to use net income, use the standard PPP application form above):

First Draw Application form for Schedule C filers using gross income:

Second Draw application form for Schedule C filers using gross income:

Loan Forgiveness Application Forms:

The SBA has also released three separate versions of their PPP Loan Forgiveness Application Form. Which form you use is based on your circumstances:

Loan Forgiveness Application Form 3508S

You use this form if your PPP was for $150,000 or less

Loan Forgiveness Application Form 3508EZ

You use this form if your PPP was for greater than $150,000 but one of the following applies to you:

  • You are self-employed and have no employees; or
  • You did not reduce the salaries or wages of employees by more than 25%, and did not reduce the number of hours of employees; or
  • You experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of employees by more than 25%

Loan Forgiveness Application Form 3508

You use this form if your PPP loan was for greater than $150,000 and you don’t meet the requirements for Form 3508EZ

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