On December 21, Congress approved a secondary COVID-19 relief bill. It’s now widely referred to as PPP2. Here’s what you need to know:
What are PPP2 Loans?
Congress has authorized an additional $248 billion to go towards small US businesses as part of the second round of the Paycheck Protection Program, with the President signing off on the Bill late in December.
Which Businesses are Eligible for PPP2?
If you have already received a PPP loan, you may be eligible for a PPP2 loan if you:
- Have fewer than 300 employees;
- Were in operation in February 15, 2020;
- Are not publicly traded, primarily engaged in political advocacy or lobbying, and are not significantly owned by residents of China;
- Have used your PPP1 loan for approved expenses, or you plan to use them before you would receive the PPP2 funds; and
- Can show a 25% gross revenue decline in any 2020 quarter when compared with the same quarter in 2019.
Businesses are entitled to one PPP2 loan only, for a maximum of $2 million. Applications close on March 31, 2021.
PPP2 Loan Forgiveness
Generally, the PPP1 loan forgiveness rules apply in the same way to PPP2 loan requests. This includes the simplified forgiveness applications for loans of $150,000 or less.
A summary of the requirements is:
- Loans must be spent on qualifying purposes within either an 8 or 24-week ‘covered’ forgiveness period.
- 60% of your loan must be spent on your payroll costs.
- The remainder can be spent on the ‘other’ approved costs outlined, including rent, mortgage interest, monthly utilities, certain software payments, PPE, certain repairs from looting during 2020, and essential goods expenditure from before your PPP2 loan was received and perishable goods bought before or after your PPP2 loan is received.
The Bill comprises more than 2000 pages – and is the fifth longest bill to be passed by Congress. If you need help navigating the rules, reach out to your accountant or you can ask us. We’re here to help.
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