PPP 2.0 – Here’s what we know so far about the Consolidated Appropriations Act

Under the Consolidated Appropriations Act (CAA), Congress approved an additional $284.5B for the Paycheck Protection Program (PPP), and added modifications to the forgiveness process. As the rules and regulations change over the next few weeks, we will continue to keep you updated.

The SBA has not issued final rules about how the new law will be implemented, but here’s what we know so far:

PPP Forgiveness
  • Simplified forgiveness available for PPP loans of $150,000 or less
  • EIDL Advances will no longer be deducted from the PPP loan forgiveness disbursements – originally the EIDL advances were subtracted from the total PPP forgiveness, now the Act states that EIDL Advances will not reduce PPP loan forgiveness
  • New covered expenses eligible for forgiveness such as those related to: property damage, operations expenses, PPE, and supplier costs
  • If you’ve already submitted your forgiveness application, and it’s still in review – reach out to your lender
  • Banks are predicting they’ll be able to start processing forgiveness in Feb or Marc
New PPP Loans – expected to be available after mid-Jan.
  • Second draw loans of up to $2M for eligible businesses may apply for a second PPP = businesses with a current PPP loan with 300 or less employees, and experience a 25% revenue reduction in any quarter of 2020 versus the same quarter of 2019, and have used or will used the full amount of their first PPP loan
  • First time PPP borrowers; expected to have similar rules and requirements as the first round of PPP loans
  • SBA has stated that approval decisions for this new round could take longer than the initial round of PPP, up to one week from when the bank submits the application to the SBA for the SBA to provide a decision
PPP Use of Funds:
  • Covered Operations Expenses: payments for business software/cloud services that facilitates business operations, product or service delivery, the processing, payment or tracking of payroll, HR and billing functions, or account or tracking of supplies, inventory, records, and expenses
  • Covered property damage costs: costs related to property damaged and vandalism or looting due to public disturbances during 2020 that was not covered by insurance
  • Covered Supplier Costs: expenditures to a supplier of goods that are essential to the operations of the business
  • Covered worker protection expenditures: expenses that allow a business to comply with the requirements/guidance issued by CDC, HHS, OSHA, or any sate/local governments starting March 1 (for sanitation, social distancing, etc. – PPE, physical barriers, expansion of indoor/outdoor space, ventilation/filtration systems, and drive through windows)
Some other things to note:
  • Maximum loan amounts for the hospitality industry – borrowers of second draw PPP that have a NAICS Code 72 (typically restaurants and hotels) can use a 3.5x multiplier of their average monthly payroll costs to calculate maximum loan amount (up to the $2M cap)
  • Borrowers will be able to choose their own coverage period – between 8 weeks and 24 weeks versus being assigned a coverage period for your PPP
  • PPP loan eligibility for Section 501(c)(6) not for profit organizations for the first time