PPP. Round 2.

The SBA recently announced that the Paycheck Protection Program (PPP) will re-open on a broad basis accepting applications through March 31, 2021.

The second round of the PPP loan is forgivable like the first. It will be limited in an amount of not more than $2 million.

To qualify, businesses must fulfill the following,

• Have received and used their 1st round of PPP

• Have fewer than 300 employees

• Could show an established 25% drop in gross receipts. By comparing either all of 2019 with 2020, or a quarter in 2020 relative to that same quarter in 2019.

Loan amounts will be equal to 2.5 x's the average monthly payroll costs, similar to the 1st round of PPP with the amounts capping out at $2 million as referenced above. The food and hospitality industry however could apply for an additional month, totaling to 3.5 x's the average monthly payroll costs. Finally, for loan applications of $150,000 or less could see an easier chance of getting approval since they don't require us to show substantiation of the revenue reduction.

Also, the Employee Retention Credit (ERC) and the PPP are no long mutually exclusive programs, so a business taking the PPP can now also apply for the ERC, a tax credit to offset payroll taken at the end of the year. Caveat being, that the same wages cannot be used for both, which is why we advise businesses to hold off on their forgiveness applications for the PPP and to work with their tax advisor on how to best optimize their tax credits in regards to the new CAA (Consolidated Appropriations Act) .

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