New Round of PPP Loans Authorized by Congress

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Part of the Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, authorizes another round of Paycheck Protection Program (PPP) loans for small businesses. This new round of PPP loans, being called “PPP2” by some, is similar to the first round of PPP loans that were authorized early in 2020, but there are some differences too.

Eligibility

PPP2 loans will be available to first-time qualified borrowers and, for the first time, to businesses that previously received a PPP loan. Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they:

  • Have 300 or fewer employees,
  • Used or will use the full amount of their first PPP loan, and
  • Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.

PPP2 loans are also available to Sec. 501(c)(6) business leagues, such as chambers of commerce, visitors’ bureaus, etc., and “destination marketing organizations”, provided they have 300 or fewer employees, do not receive more than 15% of receipts from lobbying, and fulfill other requirements.

PPP2 will also permit first-time borrowers from the following groups:

  • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
  • Sole proprietors, independent contractors, and eligible self-employed individuals.
  • Not-for-profits, including churches.
  • Accommodation and food services operations with fewer than 300 employees per physical location.

The bill allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.

PPP2 Loan Terms

As with the earlier round of PPP loans, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. However, PPP2 also makes the following expenses potentially forgivable:

  • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
  • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
  • Covered operating costs such as software and cloud computing services and accounting needs.

This article carries no official authority, and its contents should not be acted upon without professional advice. For more information about this topic, please contact our office.