Paycheck Protection Program Round 2 - Frequently Asked Questions for Nonprofit Borrowers

Sep 19, 2026

Paycheck Protection Program Round 2 Frequently Asked Questions for nonprofit borrowers explains key eligibility rules, funding timelines, and post-application requirements for PPP loans. It covers the program closure and reopening under later COVID-19 relief acts, updates affecting second-draw borrowers, and changes to forgivable costs. The FAQ also details application deadlines, lender acceptance limits, and simplified forgiveness procedures for smaller loans, emphasizing required certifications and revenue decline calculations.

LanguageEnglish

CategoryLetters

FormatPDF

Pages8

Reading Time3 min

AccessFree to download

Overview

Key Round 2 updates

Questions & Answers

Eligibility for first- or second-draw loans

Second-draw loan requirements

Shuttered Venue Operators Grant and PPP coordination

PAYCHECK PROTECTION PROGRAMROUND2: FREQUENTLYASKEDQUESTIONS FOR NONPROFIT BORROWERS Last updated June 7, 2021 This document is for informational purposes only, is not intended as legal advice, and does not substitute for consulting with a lawyer about specific facts and circumstances. This document does not constitute a solicitation, and your use of this document does not create an attorney-client relationship between you, the Pro Bono Partnership, and/or Lowenstein Sandler. In addition, the information in these FAQs may change based on guidance by the SBA or Treasury as well as a change in law. | The Paycheck Protection Program closed on May 28, 2021. TheSBAis no longer accepting new | | --- | | applications from participating lenders. The following FAQs are for informational purposes only | | and to assist borrowers who obtained PPP loans with their loan forgiveness applications. | Overview On December 27, the President signed into law the Consolidated Appropriations Act, 2021. The Act included a roughly $900 billion COVID-19 relief package, known as the “Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act”(“Economic Aid Act”) . The Economic Aid Act made available approximately $284.5 billion in new Paycheck Protection Program (“PPP”) funding and reopened the PPP for initial and second-draw loans on terms that were generally favorable to nonprofits. The American Rescue Plan Act, which became law on March 11, allocated an additional $7.25 billion in funds to the PPP. The deadline to apply for a PPP loan under the American Rescue Plan Act was March 31, 2021. The PPP Extension Act of 2021, which became law on March 30, extended the PPP application deadline to May 31, 2021. The PPP Extension Act also provided an additional 30 days—until June 30—for the SBA to finish processing applications received by the May 31 application deadline. On May 6, 2021, the SBA announced that it would only accept new PPP loan applications from community financial institutions (which typically serve underserved communities) . The Economic Aid Act had set aside $15 billion for loans originated by community financial institutions. PPP funding for loans originated by lenders other than community financial institutions was exhausted as of May 6. On May 28, 2021, the SBA advised lenders that no new PPP applications would be accepted because all PPP funding had been exhausted. Borrowers who applied for and received a PPP loan have 10 months from the end of their covered loan period to apply for loan forgiveness. After such time, borrowers must start making payments on the loan to their PPP lender. Key Paycheck Protection Program Round 2 Updates 􀁸 Certain borrowers may be eligible for a “second-draw” PPP loan of up to $2 million. Eligible organizations must have fewer than 300 employees, have used or will soon use the entire amount of their first PPP loan, and have experienced a decline in gross receipts of at least 25% during any quarter of 2020, as compared to the same quarter of 2019. 􀁸 Potentially forgivable costs are now expanded to include operating expenses (e. g., payments for business software and cloud computing services); costs related to property damage, vandalism, or looting resulting from public disturbances that occurred in 2020; worker protection expenses and facility modifications necessary to comply with COVID-19 safety guidelines; and supplier costs for goods essential to entity operations. 􀁸 The loan forgiveness application process is now simplified for loans up to $150,000 . 􀁸 Any Economic Injury Disaster Loan (“EIDL”) advance received by a borrower is no longer deducted from the borrower’s PPP loan forgiveness amount. Questions & Answers What types of organizations are eligible for a first-or second-draw PPP loan? In general, you are eligible for a first-draw PPP loan if you employ fewer than 500 employees (full-time and part-time)who live in the United States per physical location of yo

FAQs

How did PPP Round 2 funding eligibility and deadlines change for nonprofits?

The document describes how the Consolidated Appropriations Act and later legislation reopened PPP for initial and second-draw loans, while extending application deadlines. It also notes that PPP closed on May 28, 2021, with SBA guidance that no new applications were accepted after funding was exhausted.

What organizations are eligible to apply for a first-draw or second-draw PPP loan?

Eligibility for a first-draw generally includes nonprofits operating as of February 15, 2020, with fewer than 500 employees per physical location. The document states second-draw eligibility requires use of the first-draw loan, no more than 300 employees, and a gross receipts decline of at least 25% in a 2020 quarter compared to the same quarter in 2019.

What changes were made to loan forgiveness and forgivable costs for Round 2 borrowers?

The FAQ expands potentially forgivable costs to include certain operating expenses, COVID-19-related worker protection and facility modifications, and supplier costs for essential goods. It also states the forgiveness application process is simplified for loans up to $150,000, and that EIDL advances are no longer deducted from PPP forgiveness.

Sep 19, 2026

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