February 12, 2021: Why PPP 2 Is Failing, by the Numbers

Gusto Editors

February 12, 2021

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Why PPP 2 is failing

Since it reopened for all borrowers on January 13, 2021, the Paycheck Protection Program (PPP) has approved just over $100 billion in loans, less than half of its $284 billion in new funding. Last year, PPP Round 1 distributed $525 billion between April and August; however, billions in loans ended up in the wrong hands.

So the question remains: Why are PPP loans still not landing in the accounts of small business owners who are in dire need of funding to stay in business? Gusto surveyed 1,093 small businesses about their experience with PPP Round 2 to answer this question. Here’s what we learned:

  • One in 10 small businesses who need aid have not applied for Round 2 because they have not had Round 1 loans forgiven. (More than half of small businesses have yet to receive forgiveness for PPP Round 1.)
  • Approximately one-third of small businesses that are eligible and in need of PPP 2 have applied for it, but have not heard back on whether they’ve been approved.
  • 44% of small businesses that did not apply said it was because they have not experienced the required 25% gross revenue reduction. What’s more, 42% of businesses in hard-hit industries were left out because of this requirement.
  • Three out of four small businesses pursuing PPP Round 2 don’t think the aid will be enough to help them make it to July, which is when most public health experts expect vaccine distribution to reach most of the country.
  • 80% of businesses created in 2020—who are not eligible for PPP—stated that they needed or would have applied for a PPP loan if they were eligible. 

Other small businesses said they won’t apply this round because the paperwork is too complicated, they’re worried about not getting forgiveness, or because they don’t have an existing banking relationship.

The bottom line is, the way the PPP is designed has made it difficult for smaller businesses to get the financial relief they need—but, it is still one of the largest lending programs available to businesses impacted by the pandemic. If you’re currently going through the PPP application process, check out our list of 50 PPP FAQs and expert answers that may help, including what to do if your PPP application has been rejected.

Read the full results of Gusto’s PPP 2 survey here.

From Gusto, with love

This Sunday is Valentine’s Day, and here at Gusto, we decided to celebrate by asking members of our team to write love notes to their favorite small businesses.

From the craft store that always brought a smile on a commute home to the health care outfitter that sent a sick Gusto team member a care package over the holidays, these stories are a beautiful reminder of why we pour our hearts into helping small businesses every day.

Read our favorite small business love letters here.

1099 101

It’s tax season, and there are a couple 1099 filing deadlines just around the corner. The key is to know which ones your business is on the hook for. That’s why we created a guide to help you understand which Form 1099 you need.

As a business owner, there are three main 1099 variations you need to know about: Form 1099-NEC, Form 1099-MISC, and Form 1099-K. Which form you need usually depends on what kind of payments you made and how you paid them. We break down the differences between these three main forms in our guide and help you figure out when to use them.

Already know which form you need? Check out our individual guides for more info on how to fill out and file your forms:


  • Feb. 23: How To Achieve Permanent Profitability Within the Next 24 Hours — Learn how to master the Profit First methodology to drive permanent profit in your business with Mike Michalowicz, the author of Profit First, and Cyndi Thomason, President at Bookskeep. Register here.
  • Feb. 24: Celebrate Black Excellence with USBC — February is Black History Month, and our partners at the US Black Chambers (USBC) are celebrating with a profile on Black excellence in business. Register here.
  • Feb. 25: IFundWomen of Color Pitch Competition — IFundWomen of Color is inviting five IFundWomen of Color members to pitch their businesses in front of a panel of VCs, Fortune 500 brands, and successful entrepreneurs. RSVP here.

Top relief options for the week

  • Milwaukee Downtown BID No. 21’s Grant Program provides $100,000 to help retailers, restaurants, bars, and personal service providers through the pandemic. Eligible small businesses can receive a grant of up to $5,000 that can be used for operating expenses and pivoting the business in response to COVID-19. Applications are due February 16, 2021. 
  • Banking on Diversity Program is open for applications from small businesses with MBE Certification in specific Virginia, West Virginia, and Maryland counties. The program offers up to $50,000 for existing small businesses, $10,000 for new businesses, and has $1 million available to minority-owned businesses on a first-come, first-serve basis. 
  • Pikes Peak Small Business COVID-19 Relief Program offers grants of up to $7,000 for small businesses in El Paso County, Colorado. Round 2 is now open, and applications are due by March 5, 2021. 
  • See more relief options in our Small Business Relief Finder.

Want more small business news and resources? Check out past editions in our archive.

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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