December 30, 2020
Congress has recently approved a $900 billion COVID-19 relief package as part of the Consolidated Appropriations Act, 2021. This relief act provides for a second round of Paycheck Protection Program (PPP) loans containing provisions targeted to help smaller businesses and offering the potential for additional funding to borrowers with original PPP loans.
Although very similar to the first round of PPP, the second round of PPP (PPP 2.0) has some key differences that are summarized below.
- PPP 2.0 will be open through March 31, 2021 with an additional $284 billion in funding.
- Businesses are eligible to receive a second forgivable loan if they:
- Employ 300 employees or less;
- Have used or will use the full amount of their first PPP; and
- Demonstrate at least a 25% reduction in gross receipts in any quarter in 2020 compared to the same quarter in 2019.
- Small business owners who have not applied for PPP funds will be able to apply for an initial PPP loan.
- Simplifies the forgiveness application for loans under $150,000.
- Allows borrowers to specify a covered period between 8 and 24 weeks for PPP 2.0 loans.
- Repeals the requirement of deducting an EIDL Advance Grant from PPP loan forgiveness amount.
- Expands eligible expenses to include costs for modified business operations, supplier costs, and costs associated with complying with health and safety guidelines.
- Businesses in the restaurant and hospitality industries are eligible to receive loans of 3.5 times average monthly payroll, rather than 2.5 times
Please note that the Small Business Administration (SBA) has not yet released guidance and regulations related to the second round of PPP. The SBA will be issuing these regulations within the following 10 days.
We will keep you updated as this guidance is released.
Please note that this information is subject to change as a result of evolving legislative developments and government guidance.