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Second round of PPP funding begins Monday

Single-employee companies like independent owner operators can get funds under PPP

Image: Jim Allen/FreightWaves

The bank doors open Monday for the next round of borrowing under the Paycheck Protection Program, with borrowers from the first round eligible to go in for another round of low-interest loans that can be forgiven under certain circumstances.

The Small Business Administration announced Friday that it would start taking applications for new borrowers and “certain” existing borrowers. But the restricted nature of the first days is not expected to last long; the SBA said the PPP will open “to all participating lenders shortly thereafter.”

PPP round 2 will end on March 31. The first round was extended once but the response to it in that added period was minimal, leading to the change in this round that allows a first-round borrower to obtain more money. 

While there were thousands of trucking companies and independent owner-operators who received money in the first PPP round, there were always questions among some independent owners whether they would qualify. In the trucking categories divided up by NAICS codes, there was a long list of companies that received money in the first round that listed just one employee.

But in a document released by the SBA concurrent with the release of PPP 2, much of it was verbatim from what was published in the first round. The regulations for self-employed persons make it clear that a loan to an independent contractor is doable under PPP. In the Q&A section, a question is posed: “I’m self-employed and file a form 1040, schedule C. Am I eligible for a PPP loan?”

The answer is yes, if certain conditions are met: You needed to be in operation Feb. 14, you have self-employment income and you’re going to file that section C this year. You also can’t be in a partnership if the partner is filing as well. 

Congress authorized $284 billion in additional PPP lending. It is part of a broader package of $325 billion that included more money under the Economic Injury Disaster Loans program.

The first round and its extension closed in August with about $130 billion untapped. But that round did not permit borrowers to come in for a second round. However, getting money a second time is limited to companies with no more than 300 employees. The limit in the first round was 500.

Forgiveness for borrowers of $150,000 or less has been simplified and mostly involves borrower attestation to several key rules in a one-sheet form that has not been released yet.

The Journal of Accountancy defined the eligible amount to be borrowed as an amount of up to 2.5 times average monthly payroll costs, though employee costs more than $100,000 are capped. The years for the basis are 2019 and 2020. (There are higher limits for businesses particularly hit hard by the pandemic, like hotels and restaurants.)

The new round of PPP borrowing for businesses includes a requirement that a borrower be able to show a 25% quarterly drop in revenue, year on year from 2019, to be eligible. Given the strength of the freight market, it has been noted that proving that might be difficult for some trucking companies. 

There are several other provisions in the new round that differ from the first round. The covered period of expenses can be any length chosen by the borrower between eight and 24 weeks. There are a greater number of expenses covered. Many types of business that weren’t allowed to get money in the first round now can, including media companies and 501C organizations. Financial institutions that participate in the program will have to answer other questions.

More articles by John Kingston

Inside the PPP data: lots of small companies benefited from the program

Drilling Deep: loan forgiveness is the next big step as PPP moves toward its completion

Drilling Deep: trucking got big money from PPP; what will be the impact?

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.