The Top 10 PPP changes in the Bipartisan Emergency COVID Relief Act of 2020
December 16, 2020
On December 21, 2020, Congress passed the Emergency Coronavirus Relief Act (the Act), a component of the Consolidated Appropriations Act, 2021, which includes significant updates to the Paycheck Protection Program (PPP). The Act will make $284.45 billion of additional funds available for the PPP and $13.5 billion for Economic Injury Disaster Loans also overseen by the Small Business Association.
We have highlighted changes that will impact borrowers.
Changes affecting existing PPP loans
1. Additional eligible expenses for loan forgiveness include:
- Covered operations expenditures
- Covered property damage costs
- Covered supplier costs
- Covered worker protection expenditures
- Confirmation that forgiveness is tax-exempt
- Expenses are deductible
- No increase in basis shall be denied
3. Simplified application process for loans $150,000 and below
- Borrowers will be required to complete a one-page online or paper form and make certain certifications
- Borrowers of PPP loans can obtain ERC
- Qualifying wages for PPP loan forgiveness and ERC must be tracked separately
5. Audit plan for borrowers who, together with their affiliates, obtained $2 million or more
- Policies and procedures for conducting audits and reviews will be submitted to Congress
- Metrics used to determine which loans will be audited will be submitted to Congress
Changes exclusive to the second round of Paycheck Protection Program loans
6. Eligible businesses looking to apply for more funding
- Size of business is now limited to 300 employees (down from 500 in round one)
- Business must have experienced gross receipts decline by at least 25% for any quarter in 2020 compared to that same quarter in 2019
7. Calculating the maximum loan amount
- Two and a half months’ worth (three and a half for entities in the hospitality industry) of the average payroll for the last twelve months through date of application or 2019
- Loan cannot exceed $2 million
8. Set aside for small entities
- $25 billion of the total allotment (see below) is earmarked for businesses with 10 employees or less as of February 15, 2020
9. Increase in PPP loan round one amounts
- Requests can be made for an increase in round one amount if calculating incorrectly due to updated regulations
10. Inclusion of 501(c)(6) organizations who were previously ineligible in round one
- Organizations must have 300 employees or less
- Less than 15% of gross receipts may come from lobbying activities
- Lobbying activities cannot comprise more than 15% of total activities of the organization
Let Aprio Help
Aprio has established a dedicated PPP loan forgiveness team that is continuously monitoring new guidance from the SBA, as well as the Treasury, Congress and the IRS, to ensure we have the latest information when advising our clients.
To discuss your eligibility for additional funding or how to interpret these pending changes, contact Aprio’s dedicated PPP loan forgiveness team for a consultation.
Disclaimer for services provided relative to SBA programs and the CARES Act
Aprio’s goal is to provide the most up to date information, along with our insights and current understanding of these programs and regulations to help you navigate your business response to COVID-19.
The rules regarding SBA programs are constantly being refined and clarified by the SBA and other agencies In certain instances, the guidance being provided by the agencies and/or the financial institutions is in direct conflict with other competing guidance, regulations and/or existing laws.
Due to the evolving nature of the situation and the lack of final published rules, Aprio cannot guarantee that additional changes or updates won’t be needed or forthcoming and the original advice given by Aprio may be affected by the evolving nature of the situation.
You need to evaluate and draw your own conclusions and determine your Company’s best approach relative to participation within these programs based on your Company’s specific circumstances, cash flow forecast and business strategy.
In situations where resources are provided by third parties, those services should be covered under a separate agreement directly with that service provider. Aprio is not responsible for the actions of any other third party.
Aprio encourages you to contact your legal counsel to address the legal implications of the impact of the CARES Act and specifically your participation in any of the SBA programs.
About the Author
Justin Elanjian, CPA, is the Partner-in-Charge of Aprio’s Paycheck Protection Program (PPP) & Employee Retention Credit (ERC) Services. As a national PPP expert, prominent speaker and strategic business advisor, Justin helps both lenders and borrowers navigate the complexities of the PPP. He also helps his clients realize benefits from other stimulus package programs, such as the ERC, and is committed to strengthening his clients’ balance sheets and helping them achieve what’s next. Justin also leads a team of more than 50 professionals who share his passion for helping businesses maximize the federal COVID relief programs.