Trucking companies may be faring too well for obtaining more PPP funds

A quarterly year-over-year drop of 25% needs to be on the books for access to money

Image: Jim Allen/FreightWaves

Companies that received funding under the Paycheck Protection Program the first time around are going to get a second shot at more money. But it’s possible that trucking companies are just making too much money to get another bite at the apple.

For companies that would be going in for PPP funding a second time after getting money in the first-round program, which was ultimately extended into August, there are restrictions. And one of them is that they need to show that their revenue has fallen by 25% in any quarter in 2020 compared to the corresponding quarter in 2019.

Brandon Knight, the managing principal for transportation and logistics at Clifton Larson Allen, said the strong trucking market means that many of his clients will not qualify for a second-round PPP loan.

“When you look at the quarterly information, you’d be hard-pressed to find many companies that dipped 25% in a quarter,” Knight said. 


“I’m not saying there won’t be some that won’t be eligible,” he added, specifically noting that some specialized flatbed carriers that served parts of the manufacturing sector were not able to benefit from the surge that was so good for dry van and reefer carriers. 

Knight said that even as this second round is beginning, the process of justifying first-round loans is also underway. While he noted that a lot of companies that took funding when the PPP program first opened in April were facing a great deal of uncertainty, they soon found themselves in a bullish trucking market. 

As far as whether he would advise his clients to apply for support, Knight said his advice might be for companies to “pump the brakes and let’s look at quarter by quarter compared to 2019.” The outcome of that review, he said, would show “whether we might not have a leg to stand on in terms of qualifying.”

There have been several numbers kicked around in respect to just how much money is being offered in the next round of PPP funding. The Journal of Accountancy broke down the widely quoted number of $325 billion as including $284.45 billion to the SBA for PPP and $20 billion for loans under the Economic Injury Disaster Loan program, which existed prior to the pandemic and has helped a variety of companies including transportation firms.


The PPP also includes money for non-freight transportation, including $16 billion for airlines and $2 billion each for airports and intercity buses.

Some things change, some things stay the same

The first round of PPP program closed in August having disbursed $525 billion, but with $133.9 billion of authorized lending remaining. But the amount of money handed out in the summer revival of the program was less than $4 billion, a sign that most companies that wanted funds in the first round got them and would have been precluded from getting additional funds even if they needed them. It was clear at the end that there weren’t too many people clamoring for funds once the bank doors were opened again and that the only way PPP in this second relief round was going to have any impact would be if first-round borrowers were given a second shot at money.

Among other key changes between this round and the first round: 

— The top size of the loan for second-time borrowers under PPP will be $2 million. In the first round, loans could go up to $10 million. A first-round borrower can’t get a second round of PPP loans if it has not used up the receipts from round 1. The first-round limits of 500 employees and a $10 million loan remain in effect for companies that did not receive first-round money. 

— FreightWaves separated data from the first round, looking just at three NAICS codes: 484121, truckload carriers; 484122, LTL carriers; and 541614, 3PL companies. There were four companies among those sectors that got $10 million in the first round in those sectors. Overall, those three sectors had 263 loans in excess of $2 million in the first round of PPP, borrowing a total of about $918.6 million. None of those loans would have been eligible for second-round borrowers under the rules of round 2. 

— Along with the lower cap for second-time loans, the number of employees that can be used as the base for the loans has been reduced to 300 from 500. Todd Amen, the president of trucking-focused tax and consulting firm ATBS, said, “The money is intended for and will go to smaller businesses.” In the first round, there were 62 companies in the three main sectors that sought aid for more than 300 employees, with 11 going for the top number of 500.

— One of the more significant shifts, clarifying an earlier rule, is that business expenses that are paid with PPP loans will now be tax-deductible. Amen called the provisions “some of the biggest news” in PPP 2. The IRS earlier had ruled otherwise. According to the Journal of Accountancy, the first round of PPP didn’t tax the money received under the program as revenue, but an expense paid for by PPP money that would otherwise be deductible from a tax return would no longer be. “This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness,” a supporting document released as part of the legislation said. It added that the provision covers first-round loans as well as second-round distributions.


— A simplified loan forgiveness program and form for loans less than $150,000 is being prepared. It will involve an attestation of several requirements, including the number of employees, money spent, etc. The vast majority of loans granted under PPP’s first round to all sectors, including trucking, were less than $150,000.

— The program runs through March 31. The requirement that 60% of the receipts be used to cover personnel costs remains. The limit on how much an entity can borrow remains at 2.5X payroll expenses, but with the $2.5 million cap.

More articles by John Kingston

Inside the PPP data: lots of small companies benefited from the program

Drilling Deep: Loan forgiveness is the next big step as PPP moves toward its completion

Drilling Deep: trucking got big money from PPP; what will be the impact?

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