PPP - 2nd Round - Information
10 Jan 2021 - Nuruddin Pethani
Photo Credit: NY Public Library
Who can Apply?
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The 2nd round of PPP will commence on Jan 11th for first-time borrowers and Jan 13th for second-time borrowers.
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Applicants should have utilized all the money they received the first time.
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Revenue needs to have decreased by at least 25% in 2020 compared to the same quarter in 2019. For example, Q2 2020 (April, May, June 2020 Revenue) vs. Q2 2019 (April, May, June 2019 Revenue) must have decreased 25% Year Over Year. 1 Quarter is a minimum. Revenue reduction can also be the full calendar year of 2020 vs. 2019.
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Payroll can be calculated in 3 ways: (1) 2019 calendar year, (2) 2020 calendar year, (3) past 12 months.
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Restaurants, hotels, and other businesses categorized under NAICS code 72 will be eligible to receive 3.5x their average monthly payroll.
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Most other businesses are eligible to receive 2.5 times their average monthly payroll.
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For Loans of over 150K, additional documentation will be required.
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PPP “second round” loans are to people who have less than 300 employees, and most businesses, including sole proprietors and contractors, qualify if their revenue decreased by 25% in any quarter.
Forgiveness of loans
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Borrowers are still required to spend at least 60% of the funds on payroll over a covered period of either 8 or 24 weeks to receive full forgiveness.
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The other 40% may be used on eligible costs, including certain mortgage expenses, rent, and utility payments.
PPP2: New allowances for additional expenses
Under the renewed program, the list of eligible non-payroll expenses has been expanded to include four new categories, including:
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Costs for personal protective equipment and adaptive investments that help a PPP loan recipient comply with federal and/or health and safety guidelines related to COVID-19;
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Outlays for on software, cloud computing, human resources, and accounting needs;
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Any spending not covered by insurance that is related to property damage due to public disturbances that occurred during 2020;
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Spending to suppliers that covered costs essential to the business operations at the time the outlay occurred. For instance, restaurants’ purchases of perishable goods can now qualify.
Important tax changes
An important change outlined in the new regulation is that forgiven PPP loans will be completely tax-free. Any usually-tax-deductible business expenses paid for with PPP loans will also continue to be deductible.
Source: Sba.gov