By Demetrius Robinson

The Small Business Administration (SBA) has reopened the Paycheck Protection Program (PPP) for applications for either a first initial draw of PPP funds (First Draw) or a second allocation (Second Draw), authorized under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act). In light of the reopening of the application portal, here is what you need to know:

Paycheck Protection Program Overview

The PPP was a program designed by Congress to provide relief to businesses that were impacted by the COVID-19 pandemic. The program was designed to quickly distribute money to businesses that needed the funds in order to sustain their operations through the pandemic and retain their employees. Under the PPP program, applicants can request a maximum of $10 million for an individual borrower or $20 million for a corporate group under the First Draw. With the reauthorization of the PPP program, an additional Second Draw is now authorized for certain borrowers with a maximum loan of $2 million for an individual borrower or $4 million for a corporate group. Under the Economic Aid Act, an additional $284 billion dollars was allocated to the PPP for both first-time applicants and the opportunity for certain borrowers to obtain a second allocation of funding.

Paycheck Protection Program Updates

Under the Economic Aid Act and subsequent SBA and Treasury guidance, the PPP has been modified slightly from its original implementation. Under the Economic Aid Act, additional categories of eligible borrowers include certain housing cooperatives and news organizations. Under the updated guidance, in order to qualify for a PPP loan you must meet the following requirements:

  • Entity/Organization Type
    1. Be a certain small business concern under applicable regulations (13 C.F.R. 121.201);
    2. An independent contractor, self-employed persons, and sole proprietors;
    3. A nonprofit organization under 501(c)(3), a 501(c)(19) (“Tax-exempt veteran organization”), or a Tribal business concerning, all with less than 500 employees or an amount allowed under applicable regulations;
    4. A housing cooperative, a 501(c)(6) organization, or an eligible destination marketing organization with less than 300 employees;
    5. A news organization or nonprofit public broadcasting entity that employs less than 500 employees or an amount allowed under applicable regulations; or
    6. Other organizations and entities specifically allowed under applicable regulations; and
  • Operations
    1. Were in operations on Feb. 15, 2020, and either had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC, or you were an eligible self-employed individual, independent contractor or sole proprietorship with no employees.

In addition, based upon applicable guidance from the Treasury Department, new PPP borrowers may use either 2019 or 2020 for purposes of calculating their maximum loan amount. In addition to the update on the types of organizations that are now eligible for a PPP loan, the Economic Aid Act and subsequent guidance have updated the allowable uses, including for certain expenses associated with operations, damage to property and increased supplier costs, for PPP loan proceeds. Under the applicable guidance, borrowers may use PPP loan proceeds as follows:

  1. Payroll costs;
  2. Costs related to the continuation of group health care, life, disability, vision, or dental benefits during periods of paid sick, medical, or family leave, and group health care, life, disability, vision, or dental insurance premiums;
  3. Mortgage Interest;
  4. Rental Payment;
  5. Utilities;
  6. Interest on debt obligations incurred before Feb. 15, 2020;
  7. Refinancing an SBA EIDL loan bade between Jan. 31, 2020, and April 3, 2020;
  8. Covered operations expenditures[1];
  9. Covered property damage costs[2];
  10. Covered supplier costs[3]; and
  11. Covered worker protection expenditures[4].

Borrowers that receive a First Draw of PPP loan under the new guidance will receive an interest rate of 1% after the term of the covered period if no loan forgiveness is received. In addition, if loan forgiveness is not achieved, then a borrower will have five years to repay the loan. Finally, under the Consolidated Appropriations Act, 2021, taxpayers can now take a tax deduction for eligible expenses that were covered by a PPP loan.

The Paycheck Protection Program was a major piece of legislation in 2020 and it appears that it will continue to have a major impact on businesses during 2021. If you have any questions related to the Economic Aid Act or the Paycheck Protection Program please feel free to reach out to our PPP Compliance Team, including Demetrius Robinson at or (614) 427-5749.


[1] Covered Operations Expenses: payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.

[2] Covered Property Damage Costs: costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.

[3] Covered Supplier Costs: expenditures made by a borrower to a supplier of goods for the supply of goods that—(A) are essential to the operations of the borrower at the time at which the expenditure is made; and (B) is made pursuant to a contract, order, or purchase order—(i) in effect at any time before the covered period with respect to the applicable covered loan; or (ii) with respect to perishable goods, in effect before or at any time during the covered period with respect to the applicable covered loan.

[4] Covered Worker Protection Expenditures: operating or a capital expenditures to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending the date on which the national emergency with respect to the COVID–19 expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.