On December 27, 2020, the Consolidated Appropriations Act was signed into law. This new bill included a $900 billion stimulus package that allocated an additional $284.5 billion to the Paycheck Protection Program (PPP).
Highlights of this new round of PPP funding and new guidance include:
- Expenses related to the PPP loan and forgiveness are tax deductible.
- $35 billion is available for first-time borrowers, which now includes 501(c)(6) organizations, certain news organizations, and housing cooperatives.
- Second draw loans are available for those businesses hit hardest that meet the following eligibility requirements:
- 300 or fewer employees,
- 25% decline in gross receipts in any 2020 calendar quarter, as compared to the same quarter in 2019,
- Have used or will use the full amount of their first PPP loan.
- Businesses with a NAICS code starting with 72 (food and accommodation services) are eligible for a loan equal to 3.5 times their average monthly payroll costs, instead of 2.5 times.
- Loan amounts can be based either on the twelve months prior to applying for the loan or based on 2019 payroll costs.
- Eligible costs now include the following:
- Group life, disability, dental, and vision insurance, which are considered payroll costs.
- Worker protection (PPE) and costs to comply with COVID-19 health and safety guidelines.
- Supplier costs, such as essential expenses to the borrower’s current operations, like cost of goods sold.
- Property damage costs related to 2020 public disturbances that were not covered by insurance or other compensation.
- Simplified forgiveness is available for loans of $150,000 or less. However, we recommend not applying for forgiveness yet if you received a loan of $150,000 or less, as we expect a new simplified form.
- Borrowers can choose their covered period between 8 and 24 weeks. The start of the covered period will likely still align with the date you receive funds in your bank account.
- An Economic Injury Disaster Loan (EIDL) advance will no longer reduce PPP forgiveness. We are awaiting guidance as to how the SBA will retroactively correct things if you have already received loan forgiveness and the EIDL advance reduced your forgiven amount.
- The Employee Retention Credit can now be taken along with receipt of a PPP loan. Many conditions apply – please view our previously recorded webinar on the Employee Retention Credit for 2020 and 2021.
- If you receive a Shuttered Venue Operator Grant, you will be ineligible for a PPP loan.
We anticipate additional guidance on all of the highlights listed above within the next few days and weeks. View our previously recorded webinar for a deeper dive into all things PPP2, including how and where to apply and what these rules mean for your organization.