Back to top

Client Login

Forgot your password?

Blog

Click here to go back

Important Updates Regarding the SBA PPP Loan Program

Posted by Admin Posted on Jan 11 2021

 
 

 

PPP Loan Updates


Small businesses are getting another round of financial help with the latest spending bill passed by Congress. Let us inform you of the updates and changes to navigate the best route for your business.

 

What you need to know

The Federal Government recently passed a new COVID-19 relief bill that provides fresh Paycheck Protection Program (PPP) funding to support businesses directly affected by the pandemic. Much like the first iteration of the PPP, aid will be in the form of forgivable loans for small businesses but there are some key changes this time around. It’s important you understand what these changes mean for you and your small business.

Over the coming weeks, the SBA will issue final rules and guidance on the next round of PPP funding. We will continue to provide you with updates as more information becomes available.  Please also connect with your banker to learn their process for applying for the PPP Loan Program.

Who is eligible?

  • Businesses, nonprofits, self-employed workers and independent contractors may be eligible for the next round of PPP funding.  Section 501(c)(6) not-for-profit organizations will be eligible to receive PPP loans for the first time
  • Previous PPP borrowers can apply for a second loan as long as they have 300 or fewer employees and can demonstrate that they experienced a 25% reduction in in gross receipts in 2020 relative to the comparable quarters in 2019.
  • First-time PPP borrowers will be subject to the same eligibility rules as the original rollout.

How much are small businesses eligible for?

  • Loan amounts will be based on the applicant’s payroll as it was with the first round of funding.
  • The maximum for second-draw loans is $2 million.
  • Eligible second-time PPP borrowers may be able to borrow an amount equal to 2½ times their average monthly pay roll costs.
  • Eligible small businesses in the accommodation and food services industries (NAICS code 72) could qualify for loans 3½ times their average monthly payroll.

What are the requirements for loan forgiveness?

  • Similar to the original PPP loan program, the small business can use the loan proceeds over a period of 24 weeks and can use the funds for payroll, rent and mortgage expenses.
  • Borrowers are required to spend at least 60% of the funds on payroll expense to receive full forgiveness.
  • The other 40% of the funds may be used on eligible coast as defined by the SBA’s (Small Business Administration) guidelines. These costs can include certain mortgage expenses, rent and utilities.
  • The new bill expands forgivable expenses to include personal protective equipment, supplier costs, operations expenditures and property damage costs due to public disturbances that occurred this past year.
  • The new bill provides a simplified forgiveness process for PPP loans under $150,000. This includes a one-page certification attesting that owners complied with the program’s requirements.

Are the expenses used to seek loan forgiveness tax deductible?


This recent bill announced that the expense will be fully tax deductible, this none of your loan proceeds will be taxable income. 
 

 

 

Client Login

Forgot your password?