PPP CHAPTER 2 – WHAT ARE THE NEW RULES?
Congress just passed the new Covid Relief bill in December. We will discuss separate parts of the bill in several communications.
Today, I want to discuss the new PPP rules (called PPP2) which include $284.5 Billion dollars of relief to business owners.
Here are the new issues.
If you follow the PPP2 guidelines, most if not all of the loan is forgivable.
Congress also declared in this legislation that the original PPP loan and the current PPP loan as tax-free income, AND the forgiven expenses are tax deductible.
New PPP2 guidelines
- The deadline for applying is March 31, 2021.
- The business was in operation on or before February 15, 2020.
- Funds can be used for any 8 week or 24 week period.
- Available for businesses with 300 employees or less.
- If you took the first PPP loan, you must have used or will use those funds.
- 60% of the loan must be used for covered payroll as was PPP1.
- Expands the list of non-payroll expenses.
- includes worker protection expenses, property damage due to looting, other expenses related to covered requirements.
- Business must have suffered at least a 25% loss in gross receipts in any 2020 quarter over 2019 to qualify.
And there is a simplified forgiveness for loans under $150,000 (PPP1 used $50,000).
For PPP1 loans, the EIDL loan was required to be offset against the PPP loan for forgiveness. That requirement was eliminated. If you have already applied for PPP loan forgiveness and applied the offset, you can amend your loan forgiveness application to eliminate this offset.