On December 27, President Donald Trump signed into law a supplemental appropriations bill that provides over $900 billion in additional COVID-19 relief, including $284 billion in added Paycheck Protection Program (PPP) funds for businesses and organizations needing an initial relief program loan or a second round of funding.
Key aspects of the original PPP guidelines will continue under the new relief initiative. Qualified small businesses will be eligible to receive funds under the PPP in the form of “forgivable loans”. Key changes in the new law include an additional application window for first-time borrowers and the opportunity for qualifying borrowers to receive a second PPP loan.
We are still awaiting final rules from the Small Business Administration (SBA); however here are some highlights:
- Creates a PPP second-draw loan up to $2 million for smaller and harder-hit businesses or organizations. Borrowers must have no more than 300 employees and must have used or will use the full amount of previous PPP funds. Also, they must show certain reductions in gross receipts.
- It makes simpler the PPP loan application process for second-draw loans under $150,000 and simplifies the forgiveness application process for all loans under $150,000, including those that were made before the date of enactment of the new law.
- Prohibits PPP funds from gross income for tax purposes and clarifies that tax-deductible expenses paid with forgiven PPP loan proceeds will be allowed. This applies to PPP loans made during the original round of funding earlier this year as well as during a second round of loans.
- Increases the types of expenses eligible for forgiveness to cover operating expenses, property damage costs, supplier costs, and investments made to comply with safety guidelines for protecting workers against COVID-19.
- Allows eligible borrowers to include qualifying 501(c)(6) nonprofit organizations.
The timeline of new PPP loan availability may take several weeks as banks await guidelines from the SBA on processing new applications. LLRG will continue to monitor any developments and report such on our blog.
The U.S. Treasury and the SBA have continually modified their PPP guidelines. As a result, you should continue to watch for updates to the guidelines.
