Legally Speaking: Paycheck Protection Program 2

By: Bob Goldberg, former RSPA General Counsel

Editor’s note from Jill Miller, RSPA General Counsel: We are thrilled that recently retired RSPA General Counsel Bob Goldberg volunteered to write this Paycheck Protection Program update to benefit our members. If you would like additional information or one-on-one assistance, please reach out to me at anytime.

Most every member I have spoken with took advantage of the Paycheck Protection Program (“PPP”) available under the Coronavirus Aid, Relief, and Economic Security Act signed into law on March 27, 2020. The Act helped with payments for employees, rent, utilities, and mortgage interest. Now the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, allows for additional funds for those that have fully utilized their first loan.

If one has not sought a PPP loan previously, it is still possible until March 31, 2021, to request funds. If one did not seek the full amount available under the initial Act you may request an increase. One who received the full available benefit under the first Act may now be able to apply for a second loan.

The new legislation and interpretive guidance permit a first loan borrower who did not receive loan forgiveness by December 27, 2020, to either reapply for or request an increase to their loan, up to the maximum amount for which they were eligible. This is provided a borrower; (a) did not accept the full amount of the loan for which they were eligible or (b) returned some or all of their loan. Existing borrowers should thus consider whether they failed to seek any 2020 PPP money available or returned money that they may claim now.

A second loan is granted under the same terms as the original loan. The loan is 100% SBA guaranteed, does not require collateral, no personal guarantee, and carries a 1% interest rate. All guidance issued by the SBA and Treasury also applies to a second loan. To be eligible for a second loan a borrower must have experienced a 25% or greater reduction in gross revenue for at least one quarter in 2020 as compared to the same quarter in 2019. All proceeds from the first loan must be utilized before the second loan will be funded. It is not necessary that a first loan be forgiven in order to seek a second loan.

The new legislation expands the categories which may be considered for loan forgiveness. Covered Operations expenditures now includes “any business software or cloud computing services that facilitate business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.” 2020 property damage relating to looting or public disturbances that was not covered by insurance may now be included as well. Forgiveness may also include worker protection expenditures to comply with COVID requirements as well as Personal Protection Equipment. If your first loan has yet to be forgiven, these new categories may be considered for that loan. The covered period for forgiveness is eight weeks and up to twenty-four weeks after the date of disbursement.

The Application for the second loan still requires certification that; “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” The maximum loan amount for a second loan remains 2.5 times the applicant’s average monthly payroll costs capped at two million dollars. It is permitted to use the same 2019 calendar year payroll cost information considered for the first loan for a second loan.

As COVID-19 pandemic continues to affect our nation, our government continues to seek means to assist business. A second loan may be possible and dealers should consult with the financial institution they relied on for their first loan to determine eligibility. RSPA continues to monitor the situation and will keep you advised.

RSPA Member Benefit: Legal Assistance
The RSPA provides members with unlimited phone consultations with RSPA Legal Counsel Jill M. Miller along with access to legal templates and the opportunity to have contracts reviewed. The legal counsel also meets one-on-one with members at RSPA events (RetailNOW and RSPA Inspire) and contributes to RSPA’s Connect magazine, Community Connection newsletter, Trusted Advisor podcast, and website. RSPA provides up-to-date legal guidance from an individual that knows the industry and the issues. RSPA members can connect with Miller by email at