What the changes with the PPP mean for you:
- More Money in Time of Stress
- Easier to Receive Forgiveness
More Money in Times of Stress
The new relief bill that was signed by President Trump contains provisions for a second round of funding for small businesses, assuming they meet certain criteria:
- Have 300 or fewer employees
- Have used, or will use, all of the proceeds from their first PPP loan
- Had a 25% or greater reduction of “gross receipts” when comparing any quarter in 2020 to the same quarter in 2019.
The new round of funding is limited to a maximum of $2 million per company. If you qualify, the loan will be based on 2.5 x average monthly payroll costs in 1-year prior to loan, or calendar year 2019. In a similar fashion to the first round of funding, 60% of the PPP funds must be used on payroll costs over either an 8 week, or 24 week period. If you qualify, new PPP loans will be available through March 31, 2020.
Easier to Receive Forgiveness
If you borrowed no more than $150,000 you will now have an easier time of requesting forgiveness. Within 24 days of the enactment of the new Relief Act, the SBA is required to create a one-page loan forgiveness form that requires certification of:
- How many employees the borrower was able to retain because of the loan
- How much of the loan was spent by the borrower on payroll costs
- How much was the total PPP loan
- Borrowers are required to retain employment records for 4 years following submission
- Borrowers are required to retain other records for a 3 year period
The second round of funding was a great win for small businesses that have been struggling this year. Along with more funds being granted, the funds will now be deductible on the federal level for tax purposes, like initially intended. Some states have stated they will not allow the deductions of expenses covered by the PPP loan on the state return, such as California, so that is something to keep an eye on.
Disclaimer: This information is subject to change as more information becomes available