New COVID-19 Relief Bill and its effects on the Paycheck Protection Program (PPP)

Dec 29, 2020 | MMNT Blog

On December 27, 2020, the president signed into law the new COVID-19 relief bill passed by congress on Dec 21st. A Below is a brief overview of the bill as it relates to the PPP.

New Round of PPP funds – Along with being available to more groups and organizations, Taxpayers will be able to request a second round of funding as long as they meet the following requirements:

  1. 300 or Less employees
  2. Used all or will use all of previously received PPP funds
  3. Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019

PPP Covered Expenses – On top of payroll, rent, covered mortgage interest, and utilities the new PPP loan (PPP2)  also includes the following as eligible PPP loan expenses:

  1. Covered worker protection and facility modification expenditures, including PPE, to comply with federal health and safety guidelines
  2. Costs for supplies that are essential at the time of the purchase to the recipient’s current operations
  3. Covered operating costs such as software, cloud computing services, and accounting.

To be eligible for full forgiveness, PPP borrowers will have to spend no less then 60% of the funds on payroll over a covered period using the same parameters as the original PPP loan.

The maximum loan limit has been lowered to $2 million.

Simplified application and Terms for PPP – A simplified forgiveness application is forthcoming for loans of $150,000 or less. The SBA will be creating the new form and will have it available within a couple of weeks.

EIDL Advance – The EIDL advance does not need to be removed from the PPP forgiveness amount and has specific funds set-aside for smaller borrowers and first-time borrowers.

PPP Forgiveness Taxability – This Bill specifically states that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes the IRS guidance that came out in November of 2020. This revision includes the original PPP loan and any new PPP loans.

This blog could become outdated due to tax law updates.


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