PPP Round 2 is Finally Here!!!
On Dec 21st, President Trump has finally signed the new COVID-19 relief bill titled the Consolidated Appropriations Act that has allocated roughly $325B as well as amendments to certain elements of the CARES Act to assist small business owners. The two most sought SBA programs that were refinanced by this bill were the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP). In the middle of the summer, the EIDL program ran out of funds allocated for the advanced payments given to employers and independent contractors that indicated they had employees. Funds from the new stimulus bill will be used to bring back that program allowing previous applicants to apply for reconsideration for those grants. As for the PPP, business owners and independent contractors that were not able to receive funds in the first round as well as those that did receive funds are eligible to participate in the program. The required condition to be eligible for forgiveness for up to 100% of the loan will remain the same (60% paid toward employee wages and 40% toward rent, utilities etc.). However, for PPP applicants that did receive funding from the program will have to prove a 25% reduction in revenue comparing any quarter in 2019 to 2020 as well as commit to spending the entire proceeds on payroll and other operating cost. Also the program is only allowing employers with 300 or less W2 employees instead of 500 to participate in the program. As for the amendments stated in the new bill, it will allow employers that have received EIDL advances or grants as well as employers that have been approved for PPP loan forgiveness to not recognize these proceeds as income! Furthermore, businesses can recognize the expenses incurred and financed by these proceeds as a deduction for business taxes. There are a number of benefits within the bill that small business owners can take advantage of for the 2020 year that will be highlighted in other blogs hosted by PKN Accounting and Tax Services. Stay tuned and stay safe!