Second Round of SBA PPP Funding

Second Round of SBA PPP Funding

Ross Williams


Dear Pastors, Treasurers, Finance Chairs and Church Council Chairs,

Happy New Year!

By now I'm sure you have heard of the new Covid-19 relief package that was recently approved by Congress and signed by the President.  

It includes $284 billion dollars for a second round of Paycheck Protection Program (PPP) Loans that churches and nonprofits are eligible to apply for. 

The Small Business Administration has 10 days to issue regulations related to the new application process.  When the SBA issues these regulations, they will begin publishing a series of clarifications and new guidance. 

The summary below, contains key provisions as they are understood today.  You may remember from the first round of PPP loans that the SBA subsequently issued a series of guidance that both clarified and changed the rules after the initial funding was approved.  I will therefore communicate clarifications and updates as they become available.

My guidance at this point is to review the provisions below, start discussing this matter at Church Council meetings and be ready to apply if your church desires to do so.  For those that already received a PPP loan you should contact the issuing bank to understand their process.  They will most likely tell you that they are not ready yet but it never hurts to reach out.  For churches that did not previously receive a PPP loan, you should seek out a local bank that can assist you in doing so.  My experience is that the smaller community banks were much more responsive and helpful than the larger banks.     

Key Provisions Summary:

Limited Eligibility: Eligibility is limited to churches and nonprofits that have less than 300 employees and whose gross receipts were at least 25% less in one or more quarters of 2020, as compared to the same quarter in 2019.

Necessity Requirement: All borrowers must be able to certify that the "current economic uncertainty makes this loan request necessary to support the ongoing operations," as of the date on which the PPP loan application is submitted. 

Maximum Loan Amount: Borrowers have an option to calculate the maximum loan amount by multiplying the borrower's average total monthly payroll in (a) the one-year period prior to the date on which the loan is made, or (b) calendar year 2019, by 2.5x. The maximum loan amount is $2 million. Similar to the first round, seasonal employers calculate their maximum loan amount differently.

Choose Your Own Covered Period: Borrowers are able to choose the length of their covered period so long as it is at least eight weeks and is not longer than 24 weeks.

Forgiveness for Loans under $150,000: Forgiveness application for loans under $150,000 will be simplified to a one-page certification that includes a description of the number of employees the eligible recipient was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs and the total loan amount. Borrowers should be aware that while the forgiveness application is simplified, all of the rules still apply. All borrowers must retain all employment records relevant to the forgiveness application for a period of four years and all other records relating to PPP and the forgiveness application for a period of three years. 

Use of PPP Funds: Congress expanded the types of expenses for which PPP loans can be used for new and existing loans. In addition to payroll, rent, covered mortgage interest, and utilities, the PPP loan now allows proceeds to be used for: 

  • Covered Operations Expenditures: payments for business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, HR and billing functions, or accounting or tracking of supplies, inventory, records, and expenses
  • Covered Property Damage Costs: costs related to property damaged due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation
  • Covered Supplier Costs: expenditures to a supplier of goods that are essential to the operations of the entity at the time at which the expenditure was made and is made pursuant to a contract or order in effect at any time before the covered period or, with respect to perishable goods, in effect at any time during the covered period
  • Covered Worker Protection Expenditures: operating or capital expenditures that allow borrowers to comply with requirements or guidance issued by the CDC, HHS, OSHA, or any state or local government during the period beginning March 1, 2020, and ending on the date which the national emergency declared by the President expires related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19. These expenses appear to include PPE, physical barriers that were put in place, expansion of indoor/outdoor space, ventilation or filtration systems, and drive-through windows.