Top 23 FAQs About Paycheck Protection Loans

We'll give you the answers, too.

If your firm received a Paycheck Protection Program loan, do you know exactly how to have your loan forgiven?

If you’ve already received a loan, are you eligible to apply for a second one?

How should the proceeds be reported in your tax filings?

More than $500 billion in loans have been distributed since the Paycheck Protection Program was launched in March 2020. Close to half of all law firms – and three-quarters of solo practitioners – have received a PPP loan.

If you’re one of those firms, you’ll find answers – and online links – to all questions about the PPP in this post. Included is a U.S. Chamber of Commerce list of the 23 Most Frequently Asked Questions about the PPP.

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SBA And Treasury Announce PPP Re-Opening

The U.S. Small Business Administration (SBA) and the Treasury Department re-opened the Paycheck Protection Program (PPP) for new borrowers and certain existing PPP borrowers on January 11, 2021.

Read the SBA press release here.

Key PPP updates include:

  • PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan. 

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

  • Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

23 Most Frequently Asked PPP Questions

Click here for a “23 FAQs About PPP” article on the US Chamber of Commerce website. The questions appear below; this link takes you to the answers. Click here for the Chamber’s Guide on PPP Loan Forgiveness.

  1. How does the Paycheck Protection Program (PPP) work?
  2. How do I apply for a first or second PPP loan?
  3. What’s different about the second-draw PPP loans?
  4. How do I calculate the maximum amount for my PPP loan?
  5. What are the loan terms?
  6. Do I qualify for a first or second PPP loan?
  7. How can I get my PPP loan forgiven?
  8. What can I do to maximize PPP loan forgiveness?
  9. Do businesses with smaller PPP loans have to do less paperwork?
  10. Can I use an EIDL grant and a PPP loan?
  11. Is my business allowed to use the Employee Retention Tax Credit and PPP?
  12. Will the IRS be taxing the PPP loans or expenses paid for with PPP loans?
  13. I applied for a PPP loan. How can I find out about my current status?
  14. My bank has not processed my PPP application yet. Can I apply through another lender as well?
  15. Will my PPP loan be audited?
  16. Should I pay employees with PPP funds even if my business is closed?
  17. For independent contractors and sole proprietors, how do you document the cash you draw from the PPP loan to have it forgiven?
  18. If you have a workforce reduction, are you allowed to increase owner or other employee pay to meet the 60% threshold PPP requires?
  19. If I normally pay vacation pay and/or a bonus, can I do it now under the PPP program instead of later in the year like I normally would?
  20. Is it necessary to open a separate banking account to utilize PPP funds?
  21. Can I add new employees during the PPP loan forgiveness period, and can their payroll be included for forgiveness?
  22. What should an employer who has received a PPP loan do about an employee who is receiving unemployment insurance that exceeds their normal wages and they don’t want to come back?
  23. As a small business owner, I’m confused about how we pay for rent, utilities, etc., when my PPP loan is 60% for employee payroll. The balance remaining based on the formula will not cover rent. What can I do?

Sources: US Chamber of Commerce and SBA

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