How to Get a PPP Loan if I Start a Business in 2021?

Last Updated on May 20, 2021 by MoneyVisual

You could benefit from the paycheck Protection programs only if your business was in operation by February 15, 2020. To benefit from this incredible program, you need accounting and bookkeeping services to display your financial records correctly.

PPP enables an incentive for small business owners to retain their employees on the payroll. PPP was introduced in March 2020, allowing loans to small businesses and sole contractors to cover up their payroll costs for up to eight weeks.

This program allotted $349 billion to help small businesses, forasmuch as high application rates, so another $320 billion were implanted. The brightest side of this loan is that it’s partly or completely forgivable. Therefore, you do not have to return the amount as long as you follow specific rules.

Key Factors of PPP First Round:

  • Eligible businesses could avail themselves 2.5 times more of their average monthly payroll costs, up to $10 million.
  • If the businesses use a minimum of 60% of their funds to operate payrolls, SBA may write off their debts.
  • Another silver lining of this loan is that it does not demand collateral or a personal guarantee.
  • 1% is the rate of interest.

On December 27, 2020, Congress passed a bill renewing funding under the CARES Act, adding up $284 billion for striving small businesses of the U.S.

There are few amendments made in the PPP loan processing and forgiveness. A hike in eligible PPP applicants increased forgivable expenses and streamlined the application process. One can look up accounting and bookkeeping services as an adequately maintained financial record of a business is a must.

Economic Aid to Hard Small Business, Nonprofits, and Venues Act

The government launched the “Economic Aid to Hard Small Business, Nonprofits, and Venues act” on December 27, 2020, under which the second round to PPP, which was in existence from march to august 2020. Good accounting and bookkeeping services are mandatory to keep proper track of your finances and present them as your eligibility benchmark. If you are a sole proprietor, you can look up the best bookkeeping services as per your business.

This new bill strives for two things:

  •  to provide financial support to the small businesses who could not make it for the PPP loan in the first round
  •  to allow other eligible companies a second chance to raise a PPP loan.

The second program commenced on March 31, 2020.

How Will the PPP Funds Distribute in 2021?

Under the second PPP round, SBA received $248 billion to support first and second PPP loan borrowers.

The funds will break down as:

  • $20 Billion will be reserved for Economic Injury Disaster Loan (EIDL) for low-income communities’ businesses.
  • $15 Billions reserved for Shutter Venue operator Grants for movie theaters, Cultural Institutions, and live venues which didn’t have other options but to shut their business.
  • $12 Billions reserved for low-income businesses and minority communities.

Do I Qualify for the New PPP Loan?

First and foremost, you need to show your proper financial record to benefit from PPP. (we recommend looking for accounting and bookkeeping services for an accurate report) You can qualify for new PPP if you lie under any of the below-mentioned categories:

  • You are eligible if you did not receive a PPP loan during the first funding round
  • First-round PPP beneficiaries who meet specific criteria and require the second loan.
  • First-round PPP beneficiaries who paid back the original loan and need extra financial support.

Businesses who apply for the PPP loans are required to be in existence since, at the very least, February 15, 2020.

New PPP Borrowers Who Lie Under the Below-Mentioned Cluster Can Qualify for the Program:

  • Small enterprises or NGOs with 500 or fewer employees are entitled to other SBA 7(a) loans.
  • Small companies, 501(c)(19) veteran’s organizations, tribal businesses, and small-sized agricultural cooperatives who match SBA’s size standards.
  • You can apply for the new PPP loan if you are a sole proprietor, Independent Contractor, or self-employed.
  • Hospitality and food services business with NAICS codes starting from 72, who have less than 300 employees per physical location.

First-round PPP loan beneficiaries who lie under the following category can apply for the second programs:

  • Your accounting and bookkeeping services have to present accurate financial information to avail benefits from this program. You can also lookup for outsourced bookkeeping services if you can not afford to keep a full-time accountant.
  • Those who have below 300 employees.
  • Businesses who have used or intend to use the whole amount of the first PPP loan.
  • Enterprises that faced a gross income deduction of 25% from any area in 2020 compared to 2019 in the same area.

PPP Beneficiaries who paid back the total or partial loan also qualify for the same.

What are the Amendments Made in PPP Loan?

As compared to the first PPP, the second PPP lends up to 2.5 times more of the average monthly payroll expenses to eligible businesses. The amount is calculated based on the calendar year 2019, 2020, or the last 12 months from the application submission.

(It is the responsibility of your accounting and bookkeeping services to present the precise financial data of your business to avoid any sort of obstacles.) Companies in hospitality or food services with NAICS code starting from 72 may receive up to 3.5 times more of their monthly payroll expenses.

The utmost loan amount dropped from $10 million to $2 million for those seeking financial assistance for the second time.

Other Alteration in PPP

Within the first Paycheck Protection Program, SBA would write off debts for those entrepreneurs who spent their funds covering their payroll costs, utilities, rent, and mortgage interest payments. 

However, the expenditure criteria are a little more flexible Under the second PPP. Therefore, the entrepreneurs can get their loans forgiven if their expenditure covers areas other than payroll, rents, and mortgage interest payments.

There is a significant change in the payroll expenditure criteria; businesses can now include the group insurance benefits from the employers such as group life, disability, vision, or dental insurance. (we highly recommend accounting and bookkeeping services to avoid any disturbances during the application process)

You Can Use the PPP Fund for the Following Causes

  • Operational Expenditures: you can use these funds to pay for your business software or cloud computing service, contributing to the business operations.
  • Expenses for the Damage in Property: it covers any property damage cost that occurred because of public nuisance in 2020 costs( for which your insurance is not accountable)
  • Expenses on the supplier: PPP loan covers the expenditure cost for your suppliers, such as purchase orders, goods orders, and other critical business expenses.
  • Worker Protection expenses: feel free to spend for the personal protective equipment and similar expenses entitled to federal health and safety guidelines and local guidelines for COVID-19.


This article aimed to elaborate on the Paycheck Protection Program, also known as PPP. The first PPP is slightly different from the second PPP. (We strongly recommend having good accounting and bookkeeping services to avoid any clashes during the application process.)

The second PPP is more flexible than the first one; however, the second time, applicants’ loan amount has dropped from $10 million to $2 million. PPP has helped several small businesses, but the first round couldn’t cover all of them, so SBA launched the second round under Economic Aid To Hard Small Business, Nonprofits, And Venues Act. It commenced on March 31, 2020.

Author Bio:
Adam Denly is a business consultant, blogger, social media enthusiast, online market analyst at eBetterBooks. He has written on several topics including accounting, bookkeeping, social media marketing, SEO, content marketing, startup strategies, and e-commerce.