Second Round of PPP Loans: What’s New for HR

Updated 01/21/2021

The Paycheck Protection Program is no stranger to HR managers all over the US — originally passed as part of the CARES Act in March of 2020, the program received criticism for providing larger shares to bigger companies, vagueness and an uneven rollout. With that being said, on December 21, 2020 Congress approved a new round of PPP loans with additional changes to the program. These amendments to the PPP could prove to be very powerful for HR pros struggling to help their businesses stay afloat. Here’s a deeper look at all things PPP and how HR can capitalize on it.

What is included in the second draw of Paycheck Protection Program loans?

President Donald Trump approved the new $900 billion coronavirus relief and stimulus package, which includes another $284 billion in federally backed loans for small businesses. As a refresher, the first round of PPP loans provided approximately $525 billion to over 5 million small business recipients. The first round, however, was fraught with liabilities and numerous complexities. 

What is different about the second round of PPP loans?

The new round of PPP loans seeks to eliminate the liabilities and complexities of the first round — here are some key differences:

• The original PPP extended nearly $669 billion in loans, whereas the newest round is approximately $284 billion
• The first round of PPP loans were capped at $10 million, and the 2nd round of loans are capped at $2 million
• To address the criticism around larger companies receiving aid over small businesses, applicants must have 300 or less employees, compared to a previous 500 employees
• The expansion of the employee retention tax credit (a part of the CARES Act) means that the SMBs are now eligible to claim the credit

Are there expansions to PPP loan uses?

Absolutely! A major expansion in the latest round of PPP loans is what’s covered in eligible expenses. Per Title I, Section 04 of “The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act”, payment for software, cloud computing, and other HR and accounting needs are now allowable and forgivable uses for Paycheck Protection Program funds. Allowing small businesses to purchase modern HR software with PPP funds can help HR pros focus on business operations and higher value processes, compared to previous paper-based administrative HR work. 

The expansion to the PPP also qualifies 501(c)(6) non-profits, including chambers of commerce and other business groups, while firms that focus on political lobbying are no longer qualified. Property damages are now covered as well — which refers to costs related to property damage and vandalism due to public disturbances in 2020. For additional expansions, review the SBA provisions. 

How do I qualify and apply for the new PPP loan?

Many SMBs and contractors may qualify for the second round of PPP loans, regardless of whether or not they received funds in the first round. 

Eligible companies must be small businesses, non-profits, veteran organizations, and small agricultural cooperatives that are within the SBA size requirements. Additionally, sole proprietors, self employed individuals and contractors are eligible as well. As mentioned above, your business must have 300 or less employees and at least a 25% reduction in revenue during at least one quarter of 2020 (compared to previous quarters). Additional eligibility requirements may apply, so be sure to reference the SBA website for more information. 

Small businesses can apply for the PPP loans through any existing SBA 7(a) lender, or through any federally insured credit union or depository institution. It’s recommended that you consult with your local lender to determine if they’re participating in the program. Here’s a list of lenders by state. 

Start your application by downloading a copy of the PPP borrower application to see where to begin.

When can I apply for the 2nd round of PPP loans?

Many banks have opened up and are accepting applications for second draw loans at this time. If you have previously received a loan, you can still apply, as long as you review the eligibility requirements. Check with your bank for more specific updates.

We will provide updates as they come.

How should I spend the money? 

Your business may choose to spend the money on eligible expenses like payroll, rent, mortgage interest, utilities, covered operations expenditure, covered property damage cost, covered supplier cost, and covered worker protection expenditure. 

With the covered operations expenditures that include payment for any business software or operations-supporting cloud computing service, an HRIS might be top of mind for businesses still using paper-based processes. A strong HR software like GoCo can help streamline every HR process, including onboarding, benefits administration, and payroll. In such unprecedented times, the more administrative time HR can clear up for the unexpected, the better.

What should I look for in an HR software?

Now that we know HR software is a covered operation expenditure, let’s cover some major tips. Since the ultimate goal is to eliminate tedious, time-consuming HR administrative work to free up time for other operations, a consolidated HRIS is likely the best choice. 

Flexible HR software like GoCo includes features like:

• Remote employee onboarding. Make your best offer, digitally send and sign documents, set onboarding tasks online, ensure compliance, and automate checklists.
• Simplified benefits administration. Make it easy for you and your team to enroll in and manage all your company’s benefit offerings at the click of a button.
• Flexible payroll. Bring your own payroll, or manage everything in one place with embedded payroll. Seamlessly capture paystubs and manage reconciliations online.
• Transform any document into a fillable, signable, reportable form.  
• Advanced PTO and time tracking. Automatically calculate state and federal overtime rules, review timesheets, and approve PTO.
• Worry-free compliance. Digitally store and organize all essential documents and info for your whole team. 

Why should I apply now?

If your business is eligible for the 2nd draw of PPP loans, the sooner your SMB can receive assistance, the better. As for employee management software, this is also the perfect time to evaluate. HR software generally gets pushed to the back burner when businesses are calculating expenses, because it isn’t a concrete revenue generator. Because of the expansions in the program, HR managers have a solid business case for making the switch to modern HR software. It may even make sense to prepay for the year, so you can focus all of your efforts on rebuilding your business.

For full information on the newest round of PPP loans, we recommend reviewing the SBA provisions and the SBA website.

If you’re ready to evaluate HR software and make the switch, take a free interactive tour of GoCo to see how we can help you in 2021.