Here are some of the early details of the second round of Payroll Protection Program (PPP) as passed by Congress this week. Key provisions include:

  • It is for small private businesses with less than 300 employees, self-employed individuals, sole proprietors, and independent contractors.
  • To be eligible, your company’s revenue must have gone down 25% in any quarter in 2020 vs  your revenue that quarter in 2019. You also apply if your revenues are down 25% for the year.
  • Borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs during the year before the loan or the previous calendar up to a maximum of $2 M.  Some hard hit industries in the food and hospitality industries can receive 3.5 x their payroll.
  • You need to have used the full amount of your first PPP loan before you can apply for a second PPP loan.
  • Forgivable expenses in the PPP will equal the sum of your payroll costs plus mortgage, rent, and utility payments, operations expenditures, property damage costs, supplier costs, and worker protection expenditures incurred during the covered period.
  • The same 60/40 allocation between payroll and non-payroll costs applies to the second PPP.

Something was also included in the new bill which is good news for every small business that already received the PPP when it comes to their taxes.

The latest guidance on the tax effects of the first PPP loan is that the plan would allow business owners who received loans in the program, which are already tax-free, to claim deductions for expenses they paid for with loan proceeds. In effect, you can double dip; not get taxed on the revenue but still deduct the associated expenses!

In the new relief bill pass by the Congress, it also gives 3 more months of no payments on your SBA loan (up to $9,000 a month) started in Feb 2021. The 6 months of forgiveness that you already got is not taxable! Also the $10K advance for the EIDL is no longer deducted from the PPP!

While this new program is late in coming, it is good news for small business. Please contact your bank to see if they are participating in this new program.

Apply for the second round of PPP now through Wombly.