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By Numbers Blog

PPP 2.0 - What to Expect

Countless countries all over the world are dealing with COVID-19, and many a small business has suffered. Whether you are a bar owner in London, a restaurateur in Los Angeles, or a graphic designer in Shanghai - the fact remains that COVID has likely affected your income in some fashion. The truth is that PPP is definitely designed to help in terms of stimulus and relief in the U.S., but some are still unsure about what to expect. Will it be the same as the first round of PPP?

Have you already taken out a loan and are worrying about whether you should apply for another one? Are you thinking about relief mainly because you want to pay employees, or do you have other plans for the loan? Who exactly is this “relief” geared towards, and what exactly qualifies as a “small business? How much can you expect from this PPP 2.0 stimulus?

PPP 2.0’s focus of this stimulus is the small business. There are many questions about the COVID stimulus, and you may wonder about how exactly your business should utilize the PPP relief loan. It should be noted that the way that your small business spends the money may affect whether

Businesses may qualify for a second PPP loan by showing a 25% decrease in revenue. According to the latest Interim Final Rule (IFR) on second draw PPP loans, revenue is captured using gross receipts. The IFR generally defines gross receipts to include all revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns, and allowances.

A borrower can calculate revenue reduction with gross receipts by taking any one quarter of 2020 and comparing it to the corresponding quarter from 2019.

Small Business Intentions

This particular round of PPP is meant to stabilize small businesses, so this might not be the right opportunity for larger corporations. Many consider small businesses to be the lifeblood of the American economy, so it isn’t too surprising to find that relief and stimulus this time is meant to help small business owners specifically. You might be wondering about the exact definition of a small business if you are the head of an organization.

There’s one straightforward metric to consider: Does your business employ 300 employees or more? If not, you are considered a “small business.” It’s also important to note that your company may have to prove that its revenue has been reduced considerably due to the pandemic. If this is not the case, you may be passed over for a PPP loan.

What can I spend the money on?

There is greater flexibility in how PPP funding can may be used. For a loan to be fully forgiven, at least 60% of the money has to go towards payroll expenses. The remaining 40% or less can be used to cover a broader swath of business expenses than was allowed during the initial round of PPP lending. Beyond mortgage or rent payments and utilities, PPP money may now cover the costs of personal protective equipment and other expenses incurred to meet government-imposed COVID restrictions, as well as property damage, cloud computing, and supplier costs.

PPP 2.0 is a lifeline for companies that might otherwise go bankrupt during these challenging times. Eligible applicants that did not receive a PPP loan prior to August 8, 2020, now have the ability to apply for a PPP First Draw Loan on or before March 31, 2021. Eligibility for these loans has been revised to include additional types of entities and the covered eligible expenses have been expanded. In some cases, certain borrowers may request an increase to their original PPP loan amount.

Relief Has Its Limits

You might be ecstatic about the idea that there will be a second stimulus, given that the pandemic may have affected your business in a big way. While the PPP is designed to stimulate small businesses, the fact is that there is a limit to the relief. If you have lost millions and millions of dollars thanks to COVID-19, you might not be too thrilled to see the limit here. Specifically, the PPP maximum loan limit you can apply for is $2 million.

Of course, the good news is that the loan may be forgivable, but this is depending on the way that a small business chooses to spend its relief. The stimulus might be just what you need at this moment, but it’s also critical to recognize that this might not “save” your business if there are other factors at play.

No Harm In Trying

Some entrepreneurs and business openers will not even think about applying for the PPP loan because they already received one. However, if you qualify for a PPP loan - why not ask for added relief during this time? If your industry has been significantly affected, and your company qualifies, there’s nothing wrong with hoping to benefit from the latest COVID stimulus.

Of course, you may want to ask an accounting professional if you feel like there is no point in applying for a PPP loan. You also may have borrowed some PPP money and already paid some of it back. Your small business can still be eligible for COVID relief, so it might be worth it to apply once again.

Forgiveness For A Small Business

You might be a small business that is hoping to get some forgiveness for the PPP loan. If this is the case, there is one simple move to make: ensure that you spend the majority of the relief money on payroll. COVID has affected many employees, and a small business owner may want to ensure that their best talent remains with the company during these unsure times. In fact, you will be allowed compensation of up to $100,000 per employee and your small business may also qualify for other compensation expenses.

COVID-19 is the kind of pandemic that has changed the world economy at this point, and there will be trillions that have to be spent for businesses to get relief. Some workers, entrepreneurs, and professionals also depend on a stimulus to make sure that they don’t get evicted, in more severe cases. If your small business is hoping for forgiveness, consider whether it’s a wise decision to spend enough on payroll to keep your employees safe during this time.

It’s also important to remember that a small business employee may resent the business if they receive a PPP loan but decide not to spend a specific amount on the payroll. Entrepreneurs and small business owners will have to make important decisions regarding a relief or stimulus check and the “company culture”. You may find that employees begin working for the competition if their finances are not stable enough.

Restaurants and Hotels

The Economic Aid Act has provided for all businesses with a NAICS code starting with 72 to qualify for a loan amount up to 3.5 times payroll. First draw businesses with NAICS codes beginning in 72 will qualify if they have no more than a total of 500 employees. Second draw businesses with NAICS codes beginning in 72 are eligible if they employ no more than 300 people per location and meet the revenue reduction requirements. Restaurant and hotel locations with a shared parent company that operate as separate legal business entities can apply separately.


There is good news for your small business: this round of PPP relief is meant to be more flexible, so small business owners can worry less about what they are spending on - but that doesn’t mean that they aren’t still important decisions. A loan can be quite the obligation, and it’s crucial to spend the stimulus in the wisest manner possible. While every business can benefit from relief, making the right decisions regarding cost-cutting and delaying plans are critical.

Yes, the PPP money is meant to be payroll-focused, but that is quite understandable. COVID was a massive blow to many industries, especially small business owners in the restaurant or entertainment spaces.

Business owners will also enjoy some tax deductions thanks to the new PPP stimulus bill. Your small business should also stay on top of how much money is spent by specific dates so that your organization can remain eligible for forgiveness. If you need more help, reach out to the team at Hall Accounting Company for more information.


Deadline for employers to mail out W-2 Forms to their employees and for businesses to furnish 1099 Forms reporting non-employee compensation, bank interest, dividends, and distributions from a retirement plan


Deadline for businesses to mail Forms 1099 and 1096 to the IRS


Deadline for S-Corporate tax returns (Form 1120-S) for tax year 2020, or to request an automatic six-month extension of time to file (Form 7004) for S-Corporations that use the calendar year as their tax year, and for filing Partnership tax returns (Form 1065) or to request an automatic six-month extension of time to file (Form 7004)


Deadline for businesses to e-file Forms 1099 and 1096 to the IRS, except Form 1099-NEC


Deadline to file individual tax returns (Form 1040) for the tax year 2020 or to request an automatic extension (Form 4868) for an extra six months to file your return, and for payment of any tax due, and for Deadline for corporate tax returns (Forms 1120 and 1120-A) for tax year 2020, or to request an automatic six-month extension of time to file (Form 7004) for corporations that use the calendar year as their tax year


Deadline for household employers who paid $2,200 or more in wages in 2020 to file Schedule H for Form 1040


Deadline for first-quarter estimated tax payments for the 2021 tax year


Deadline for second-quarter estimated tax payments for the 2021 tax year


Deadline for third-quarter estimated tax payments for the 2021 tax year


Deadline for S-Corporate tax returns (Form 1120-S) for tax year 2020 for S-Corporations that use the calendar year as their tax year, and for filing Partnership tax returns (Form 1065)


Final extended deadline to file individual tax returns for the year 2020 (Form 1040), and for Deadline for corporate tax returns (Forms 1120 and 1120-A) for tax year 2020 for corporations that use the calendar year as their tax year