Don’t Forget to Apply for Your PPP2 Funding

As we discussed in an earlier article, the second round of Paycheck Protection Program (PPP2) loans is open. If your business qualifies, then we highly recommend applying for this government funding; but do it soon, because the March 31 deadline is approaching quickly!

Under the PP2 loan program, a business can obtain a forgivable loan. The loan must be spent on eligible expenses (like payroll, mortgage interest, utilities, rent, and certain other expenses). As long as (1) the loan it was spent on eligible expenses, (2) at least 60% of the loan was spent on payroll, and (3) employee and compensation levels are maintained, then the loan may be forgivable, which means it does not need to be repaid. As an additional bonus, the loan forgiveness does not constitute taxable income.

To qualify for the PPP2, your business must:

  • have 300 or fewer employees;
  • have previously received a First Draw PPP loan;
  • have used the full amount of the prior PPP loan only for authorized uses; and
  • have experienced at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

To meet the final bullet-point, you need to show the reduction only on in one set of correlative quarters. Most aviation industry businesses experienced at least one quarter of harsh economic circumstances in 2020 so most aviation industry businesses should qualify under this element.

The small business administration has published guidance on how to calculate your maximum loan.

Applications can typically be submitted through your local bank. There are a number of financial organizations that are also processing these loans for businesses who don’t want to use their local bank. The deadline for applying for this program is March 31, 2021.

About Jason Dickstein
Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. Since 1992, he has represented aviation trade associations and businesses that include aircraft and aircraft parts manufacturers, distributors, and repair stations, as well as both commercial and private operators. Blog content published by Mr. Dickstein is not legal advice; and may not reflect all possible fact patterns. Readers should exercise care when applying information from blog articles to their own fact patterns.

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