NEW PPP AND LEGISLATION UPDATE
Hello!
We hope this update finds you well, healthy and happy.
I'm sure you've all been following the news and the newest round of Covid stimulus. Here's we know about the PPP new round, mostly stolen from other sites:
WHO CAN APPLY?
For first-time borrowers, businesses must have 500 or fewer employees. Borrowers applying for a second PPP loan must have 300 or fewer employees. These thresholds apply to nonprofits, veterans' organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors.
Please note that certain businesses over the respective employee limit, including franchises and NAICS 72 businesses (Accommodation and Food Services), may still qualify.
All borrowers applying for a PPP loan need to meet the SBA’s certification of need requirement, attesting that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Businesses using a Professional Employer Organization (PEO), or transitioning to a PEO, that meet the eligibility criteria for a loan can apply.
https://www.adp.com/contact-us/customer-service/paycheck-protection-program.aspx
WHAT'S NOT CLEAR YET?
There is a reduction in income requirement that is unclear at this point. The legislation states that a 25% reduction in any one quarter compared to a quarter in the previous year is required for a second round of funding, but there are many exceptions to this requirement, so I've reached out to my bank to get more clarity.
WE SUGGEST YOU REACH OUT TO YOUR BANK OR LENDING INSTITUTION ASAP TO CLARIFY WHERE YOU ARE AND WHAT FUNDS YOU MAY BE ELIGIBLE FOR.
HOW DOES THIS ROUND DIFFER FROM THE FIRST ROUND?
Some aspects are broadly the same. Applicants have between eight and 24 weeks to use the funds, with at least 60 percent going toward payroll and the rest toward eligible expenses like rent and utilities.
New loans are capped at $2 million, compared to $10 million before. Applicants must have no more than 300 employees, instead of up to 500, and must demonstrate at least a 25 percent drop in revenues from the fourth quarter of 2019 to the same period this year.
WHAT ABOUT MY FIRST LOAN?
A few weeks ago, the government simplified forgiveness applications for businesses that got less than $50,000, requiring only a description of how much loan money was spent on payroll, and how many employees the recipient was able to retain as a result. The new bill ups that limit to $150,000. Affected businesses will not need to submit documentation supporting their claims, but should keep it on hand in case of an audit down the line. This is why Katie had been suggesting to wait on applying for forgiveness until this legislation passed, as the new applications are very simplified.
If you’ve already applied for and received forgiveness, none of the new provisions apply — you’re done. But you can try to get a second loan.
If you have not gotten a first round loan we strongly encourage you to apply. If you would like a second round and need help, please be in touch with us. Many clients got less than they could have last time due to not having the correct calculations.
As always, we are here to support you during this process. It is also 1099 season and tax season, so please be patient while we work through this new legislation and keep on top of our normal year end tasks.
Happy new year, I can't wait for this one to be done.
-Katie and the RevATX Team