- Economic Aid to Hard-Hit Businesses, Nonprofits, and Venues Act (the Act) is providing $284 billion in Payroll Protection Program (PPP) loan funding—is your small business eligible?
- Contact DSJ’s Coronavirus Response Team (CRT) for more information on our PPP Loan assistance services
2020 ended on a high with President Trump giving the seal of approval on a $900 billion COVID-19 relief bill, the “Act,” which included a $284 billion budget towards the second round of PPP loans. The IRS has clarified guidance on deductibility of loan expenses, but some questions of eligibility still remain unconfirmed by the Small Business Administration (SBA).
HERE’S WHAT WE KNOW:
The Act makes available PPP2 loans to second-time borrowers who previously received loans under the CARES Act. First-time borrowers, including those who did not apply or were previously ineligible for loans under CARES, also may apply.
Official guidance will be announced when the SBA and Treasury clarify terms and carry out specifics of the program.
SECOND-TIME BORROWERS:
Eligibility caps at 300 employees (per location for franchises and NAICS 72 businesses) for all small businesses looking to apply. This excludes those who previously qualified under the SBA’s “alternative size standard” set in play for CARES Act. Second-time borrowers must now provide gross receipts during the 1st, 2nd, 3rd, or 4th quarters demonstrating loss as per the revenue reduction requirement in the Act. Borrowers who returned all or part of their first-round loan monies are eligible.
FIRST-TIME BORROWERS:
For the most part, similar rules of eligibility apply as they did for the first round of PPP loans. First-time borrowers include those who did not apply during the first round of PPP loans as well as any newly-eligible entities. Most first-time borrowers are limited to a 500-employee cap, except for certain organizations and housing cooperatives which are limited to a 300-employee cap. All first-time borrowers will have to certify the necessity of the loan, however, they are not required to provide gross receipts for the revenue reduction requirement like second-time borrowers.
STILL UNCERTAIN:
It is not clear yet whether the $20 million loan cap will apply to single corporate groups (non-franchise/NAICS 72 businesses) in first or second time borrowing. It has also not yet been determined whether CARES Act certification of necessity will still be applied for second-time borrowers as it exists for first-time borrowers.
DSJ IS HERE TO HELP. Our team of experts is here to help you and your small businesses tackle these challenges, together. From loan applications to forgiveness, our Coronavirus Response Team is ready to see your business through. Call us at 516-541-6549 or visit our website and our COVID-19 Information Center to learn more and stay up to date.
Sincerely,
Devin McQuillan
Associate, Creative Solutions
Contact:
516-541-6549 | Email