Article written by:
Rebekah Smith, CPA, CFF, CVA, MAFF
   Director of Forensic & Dispute Advisory Services
Dustin Minton, CPA, MBA
   Director, Restaurant Services

Article originally published: April 22, 2020
Last updated July 1, 2020

On April 27, 2020, the second round of funding for the Paycheck Protection Program (PPP) was authorized in the amount of $310 billion. This is great news for those who were shut out from the first round of the PPP that authorized $349 billion and dried up within two weeks of being offered. This second round is expected to set aside $60 billion for smaller lending facilities to better reach small businesses that are minority-owned and in rural areas. In addition, there will be $10 billion for grants under the Emergency Economic Injury Disaster Loan program and $50 billion for loans under the same program. If you recall, these programs also ran out of funding in the last week.

What you need to do now

It is still expected to be a first-come, first-served application process and many banks are still processing applications from the first round that were approved by the SBA to be funded. There is also a backlog of applications that were not approved. These new funds are expected to go just as quickly as, or quicker than, the first round so it is important to be ready.

  1. Contact your banker and confirm whether you need to reapply for the PPP loan and discuss how your application will be prioritized by the bank.
  2. Understand whether your bank is still accepting applications. Some are waiting until loans already in process are completed before accepting new applications. Some are taking applications now for the next round so you are already in line.
  3. Consider establishing a relationship with a smaller lending institution that will improve your priority in the line. Some smaller lending institutions were able to get their customers through the application process quicker than larger institutions.
  4. Complete your application and have the necessary supporting documentation ready to go as soon as the application process goes live again. It is likely that you will need to provide this documentation at the same time as your application. Not having it ready could slow the process.
  5. Consider investigating the process at multiple banks to determine which one can best serve your needs as quickly as possible.

Please take note that you can only have one PPP loan so if you have yours, you cannot apply for another PPP loan. However, there is an opportunity to apply for the Economic Injury Disaster Loans directly through the SBA once these programs are funded and reopened. Remember that the disaster loans do not have a forgiveness aspect to them, require personal guarantees for loans greater than $200,000, and require collateral; however, they do offer a longer payback period at a competitive interest rate of 3.75% for businesses (2.75% for nonprofit businesses).

If you missed the first round, it is important to take the steps listed above so you are not shut out of the second round of PPP loans. If you need help getting prepared, please contact your GBQ representative and we can help you with your loan calculation and documentation needed to apply for the loan.

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