Over the weekend, the Small Business Administration (SBA) released the latest guidance for the Paycheck Protection Program (PPP). The PPP is designed to provide financial support to small businesses to help keep their workforce employed.
The revised PPP program:
- Allows for borrowers who previously received a PPP loan to apply for a “Second Draw” loan.
- Allows new borrowers to apply for a “First Draw” loan.
- Expands the eligibility for new borrowers to include 501(C) 6 organizations, housing cooperatives, direct marketing organizations, among other types of organizations.
- Allows borrowers to set their loan covered period to be any length between 8 and 24 weeks to best meet their needs.
- Allows for greater flexibility for seasonal employees when determining payroll costs.
- Covers additional expenses such as group insurance payments, cloud operating expenses, property damage costs such as those associated with looting as a result of public disturbances, supplier costs, and worker protection expenses (i.e. PPE).
- No longer requires those who received an Economic Injury Disaster Loan (EIDL) as well as a PPP loan to reduce their PPP loan amount by the EIDL amount.
- Prohibits publicly traded companies from receiving a loan.
- Maintains the previous requirements for loan forgiveness: employee and compensation levels maintained; the loan is spent on payroll costs and other eligible expenses; and at least 60 percent of the loan is spent on payroll costs.
First Draw applications have opened for applications from participating Community Development Financial Institutions, Minority Depository Institutions, Certified Development Companies and Microloan Intermediaries. Second Draw applications from these institutions will open on January 13. First and Second Draw applications from all other lending institutions will open at a later date to be announced.
In addition to the new PPP program, the federal stimulus package also expands the Employee Retention Tax Credit; reopens the EIDL $10,000 grant program; and creates a grant program solely for eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives that have experienced at least a 25 percent drop in revenue. We anticipate more guidance on this information to come.
As well, Congress has enacted an expanded tax deduction for business meal and beverage expenses in 2021 and 2022. For these years, taxpayers may now deduct 100 percent of these expenses from their tax filings as opposed to the previous 50 percent deduction. Expenses include delivery and carryout meals as well as those in restaurants.