PPP Loan Update - Second Draw Application! - YouTube

Yo, what's going on everybody? Today is Monday,  January 11th I think. Yes, January 11th.  

Welcome back to my channel. Thanks for joining  me today. If you haven't done so already,  

if you're new here, I'd really appreciate it if  you'd consider subscribing to my channel and,  

if you find this video helpful, be sure to  give this a good like and share it with your  

friends and family who you might think  might find it helpful alright. So today  

I'm going to be talking about the second draw  PPP loans since the application was released,  

was it earlier last week, or I'm sorry, later  last week. And I'm just going to go through some  

specifics that might help clear up some things  about this second draw loan alright. So, let's  

start with some of the basic things here. So what  can be calculated as "payroll costs" or how is  

payroll cost calculated? So basically you can use  average monthly payroll from either 2019 or 2020  

in order to figure out how much of a loan you can  get. So, you know, if you're familiar with the  

PPP, you would just take your average payroll for  the year, you would exclude any employees that had  

payroll greater than $100,000. So you would just  exclude the portion over $100,000 so, payroll up  

to a $100,000 per employee, you're good there.  And that includes you as the owner okay. So,  

you take that number, you divide it by 12 which  is your, which gives you your average monthly  

payroll costs, then you multiply that number by  2.5 and that should give you your loan amount.  

Now if, the new thing here in PPP second  draw is if you are a restaurant or hotel  

or you know, how they classify that is if your  NAICS code is 72, then you actually will get  

3.5 times your average monthly payroll costs. So  you get a larger loan there. So, the first draw  

PPP used your 2019 figures. If you are applying  now for the PPP, you can use either 2020 or  

2019 figures. And if you are applying for the  second draw PPP, if you continue to use your 2019  

numbers, your lender likely won't request anymore  documentation okay. So it just simplifies things a  

little bit. If you are self-employed, independent  contractor, or what have you and you file your  

taxes on a Schedule C, then you are still using  Line 31 of your Schedule C for either 2019 or 2020  

to figure out your average monthly payroll costs.  And of course, if you have employees as well, you  

would include the total costs of eligible  payroll for those employees. And lastly,  

if you are an owner of a partnership then how you  calculate the eligible payroll costs is looking at  

all the owner's K1s and looking for net earnings  from self-employment, that line the net earnings  

from self-employment and you would use that  number to calculate how much of an average monthly  

payroll cost your company has. So, if you don't  have 12 months of payroll, you would basically use  

the number of months that you ran payroll okay.  So, let's say you ran payroll for either just  

maybe November and December of 2020. Then  you wouldn't take that number divided by 12,  

you would take that number divided by 2 since  you ran it for 2 months. So, if you're new, if  

your business has been in existence since at least  February 15th 2020, and you at least ran payroll  

in any number of months, you will still qualify  for the PPP. Okay so, since the application was  

released, there was something I noticed is that  if you wanted to apply for the PPP second draw,  

you must have already applied and received the  PPP first draw earlier in 2020. Now if you did  

not do that, if you for some reason missed the  boat or decided not to apply for PPP first draw,  

you can still apply for PPP first draw during  this time. Second draw is available for folks who  

applied for first draw and used it up, maybe  even got it forgiven already, so now you want  

to apply for the second draw. If you missed the  boat on first draw or if you applied right at the  

end of the first draw and then your application  was never processed, now you can apply for PPP  

first draw. And the rules for PPP first draw  apply because rules for the second draw are a  

little bit different. So, you're applying for the  first draw, the first draw rules apply. And I have  

videos on that in the past, just browse through  my channel and see what rules for first draw are.  

The only difference now is that you can use 2020  figures for your payroll costs. One important  

thing to note here is you have until March 31st  of 2021 to apply for either first draw or second  

draw. So, don't wait until the last minute  if you're on the fence about this, just apply  

and you know, you will likely receive the loan.  And then you'll just be able to get it forgiven.  

But if you're on the fence, apply, you'll get  an offer, you can either choose to accept or  

decline the offer but if you wait until the  last minute, your chances of getting anything  

are pretty low okay. So, that brings me to the  25 reduction rule, the 25% reduction of revenue  

rule okay. And this is just for second draw loans.  If your PPP loan is anything less than $150,000,  

you will not be required to prove that you had a  reduction in revenue when you apply for the loan.  

You will likely need to prove it when you apply  for forgiveness or if the SBA requests from you  

at any point during the application process.  If your loan is going to be over $150,000  

then you have to provide the burden of proof  that you did see a reduction in revenue from  

any quarter in 2020 compared to that same quarter  in 2019. Now you can also use an annualized method  

where you use the 12 months of revenue sometime in  2020 and compare it to revenue in 2019. For that  

burden of proof, is usually done by a, you know,  financial statement, they might request even bank  

statements, I doubt it but I'm sure they're going  to request financial statements from a quarter in  

2020 and compare it to a quarter in 2019. Now just  because your loan is under $150,000 and you're not  

required to prove that you had a reduction  in revenue doesn't mean that you should lie  

just to get the loan okay. If your business  did really well in 2020 compared to 2019,  

I'm sorry but you don't qualify for this  loan. Just because they don't ask for proof,  

doesn't mean you can't get in trouble for  it later. You know, at the very least, you  

might not get it forgiven, at the very least. The  worst cast scenario, is you will be charged with  

fraud because that's what this is if you lie on  your application to get the loan, that is fraud  

and you could be charged with you know to the full  extent and you can be sentenced to time in prison.  

So if your business did really well in 2020, and  you had no reduction in revenue in any quarter,  

and you still apply for the loan, and you accept  the money, then you've committed fraud. So just  

don't do that. Alright so when can you apply  for this loan? Banks should be starting, banks  

should be opening up their portal starting this  week to apply for a first or second draw loans.  

Now if, I'll post a link to the application  that the Department of Treasury released  

in my description below but don't print  out that application and fill it out  

okay. Just wait for your bank to provide an  online portal for you to do the application.  

It's going to be pretty much the exact same  application, most likely just electronic  

okay. But just wait and see because  I don't want you doing double work  

by printing out the application, filling  it out, and then just having to do it  

again on some like different platform. Watch out  for your bank sometime this week, at the latest  

hopefully next week, at the latest, but I have  been hearing banks are starting to roll these out  

and they're planning on doing it this week.  And there's one last thing I wanted to touch  

before I end here, is that the PPP loans are  forgivable. This is basically free money and  

now that the Economic Aid Act clarifies that  you don't even have to exclude this money from  

your taxes as a deductible expense, it's even  better. So you can get the loan, get it paid back  

for you, and deduct it on your taxes. This is just  free money. So this is a forgivable loan but just  

remember that the loans are not automatically  forgiven. You have to apply for forgiveness. So,  

whether you already took first round PPP draw  or you're planning on taking the second draw  

now, just remember that your forgiveness has to be  applied for and it's just not automatic. So if you  

haven't applied for forgiveness on the first draw  yet, be sure to just do that now or sometime soon  

okay. Because the SBA might hold up your  application if you are in the process of applying  

for forgiveness or if you're pending forgiveness  from the SBA, there's a chance the SBA might kind  

of delay your second draw application okay. So,  that's all I've got for today. Thanks for joining  

me. Again, if you found this video helpful be  sure to smash that like button and share it with  

anybody you might think will also find it helpful.  And of course, if you're new here, I would love it  

if you would consider subscribing to my channel  and stay up to date with us, with everything  

going on with new relief bills right now, and  that's all I've got. Stay safe. Take care.