Paycheck Protection Program 2.0: The Sequel

Post Authored By: Brian M. Bentrup

When Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), it included the important Paycheck Protection Program (“PPP”), which was intended to be a lifeline for struggling small businesses.

The massive $2.2 trillion CARES Act allocated $480 billion in coronavirus relief for those small businesses that met certain criteria. The PPP was very popular, but encountered many administrative hurdles. The initial PPP amount was insufficient to meet the demand and need, and additional PPP funds were authorized. Ultimately, the program distributed $523 billion in forgivable government-backed loans to 5.2 million small businesses to help them keep paying their workers through the pandemic’s economic devastation.[1] Eligible businesses included those with fewer than 500 employees and the debt was forgivable provided that the funds were expended on approved uses. These requirements included using at least 75% of the PPP funds were used payroll, and the balance on mortgage payments, interest, and utility costs.

Congress approved another stimulus package in December 2020, which restarted the PPP program with $284 billion in additional funding for first-time applicants and returning borrowers (“PPP 2.0”).[2] On January 11, 2021, applications went live for the second round of PPP for certain first-time applicants with broader eligibility requirements.

The PPP 2.0 program was expanded to capture more eligible enterprises. These included employees with under 500 employees, independent contractors, 501(c)(3) non-profits, and 501(c)(6) organizations (local chambers of commerce, housing cooperatives, and direct marketing organizations are certain notable exceptions). Additional caveats included the requirement that the applicant have been in business on February 15, 2020 and, for self-employed and independent contractors, imposed the new requirement that sole proprietorships show a profit for 2019.

PPP 2.0 imposes stricter requirements on second-time applicants. Most notably, only those returning borrowers with fewer than 300 employees are eligible, and publicly-traded companies and members of Congress are excluded. PPP 2.0 carves out a hardship exception for those entities that can show a 25% decline in 2020 revenue against comparable quarters of 2019.  If the entity or person was not in business for entire year, compare one (1) quarter in 2020 versus 2019. Further, amounts received from an initial PPP  loan that were forgiven are not included in revenue calculation. All applicants must establish that the initial PPP funds were used in permitted ways.

In addition, there is a payroll tax credit of up to 70% of qualified wages of up to $10,000 for each quarter per employee. There is a maximum credit of $14,000 per employee, which is applied as $7,000 per quarter. These credits are applied against payroll taxes. On top of that, the credit is refundable, which means that if the credit exceeds the taxes paid, the unused credit will be refunded as cash.

President Joseph Biden is likely to have another stimulus relief package especially with a Democratic House and Senate. Similarly, there is likely to be significant changes to the tax laws. In the interim, small businesses should avail themselves of the PPP 2.0 benefits and ensure all guidelines are followed for full forgiveness.

[1] Cowley, Stacy. “Who Qualifies for a Second Round of Small-Business Relief?” The New York Times, The New York Times, 14 Jan. 2021,

[2] Id.

About the Author:

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Brian Bentrup is a graduate of Loyola University Chicago where he triple-majored in Economics, Political Science, and Psychology. In 2015, he obtained his law degree from The John Marshall Law School. In law school, Brian was selected to be an extern for the Honorable Laura C. Liu in the Mortgage Foreclosure and Mechanics Lien Division as well as the Illinois Tenant Union.

Brian joined Pluymert, MacDonald, Hargrove & Lee, Ltd. in January 2018. His practice includes estate planning, probate and trust administration, and residential and commercial real estate. Brian also focuses on guardianships of minors and disabled adults and has been named to the approved Guardian ad Litem lists for Cook County, DuPage County, Kane County and Lake County. Brian dedicates time to pro bono work with Chicago Volunteer Legal Services representing or advocating on behalf of minors and disabled adults.

Brian is a member of the American Bar, Illinois State Bar, Cook County Bar, DuPage County Bar, and Chicago Bar Associations. He is also a member of the Justinian Society of Lawyers and the Phi Alpha Delta Law Fraternity.

Brian is licensed to practice in Illinois and Missouri. When not practicing law, Brian enjoys spending time with his wife, daughter and son, and exploring new and different culinary experiences.

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