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Consolidated Appropriations Act, 2021 - PPP Loans


In December 27th 2020 the Consolidated Appropriation Act was approved, allocating $284.5B to new PPP loans with new changes on the program like eligibility, loans amounts, forgiveness, eligible costs and including a second draw loan for those who already received the PPP funds in 2020.


Lets go over the main things you need to know about the new PPP Loans:


First Time Borrowers eligibility:

  • They are open to any small business concern, 501(c)(3) nonprofits, 501(c)(19), veterans' organizations, tribal business, self employed individuals, farmers, ranchers and independent contractors with 500 or fewer employees.

  • The business must be in operation on Feb 15th, 2020.

  • Maximum Loan Amount for first-time PPP borrowers is capped to $10 million.

  • The calculation for the amount borrowed is 2.5 times the average monthly payroll costs for the 12-month period prior to the loan application for calendar year 2019.

  • For seasonal businesses, average monthly payroll costs can be calculated using any 12-week period from Feb 15th, 2019 through Feb 16 th, 2020. (To be considered a seasonal employer you must not operate for more than 7 month in any calendar year or had gross receipts in any 6-month period in the preceding calendar year that were not more than ⅓ of the gross receipts of the remaining 6 month.

Second Draw Loans eligibility:

  • Must have previously received a PPP loan.

  • Generally must have 300 or fewer employees.

  • Must fully spend 1st PPP loan prior to disbursement of Second Draw.

  • Maximum Second Draw loan amount is $2 million.

  • Must demonstrate at least a 25 percent reduction in revenue between corresponding quarters in 2019 and 2020. The borrower can select the relevant quarter for comparison. (Special rules apply to borrowers that were not in business for all or part of 2019)

  • The calculation for the amount borrowed is 2.5 times the average monthly payroll costs for the 12-month period prior to the loan application for calendar year 2019.

  • Businesses in the accommodations or food services industries may get an increase of 3.5 times the average monthly payroll cost.

Who DON'T qualify for PPP Loans and Second Draw Loan:

  • Publicly-traded entities (for new loans)

  • Entities that receive a “Save Our Stages” grant under CAA 2021.

  • 501(c)(6) entities that are professional sport leagues and involve lobbying or political campaigns.

  • Entities with significant ties to the People’s Republic of China or the Special Administrative Region of Hong Kong (20% or more owned by an entity organized under the laws of or with significant operations in China or Hong Kong or with a Director who is a resident of China).

Eligible Costs for First time and Second Draw borrowers:


Payroll Cost:

  • Compensation (salary, wage, commission, bonuses, or similar)

  • Payment for vacation, parental, family, medical, or sick leave

  • Allowance for dismissal or separation

  • Payment for group health care benefits, including insurance premiums.

  • Payment of state or local tax on employee compensation

  • “Other employer-provided group insurance benefits” such as life, vision, dental and disability insurance premiums.

  • Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

Non-payroll Cost:

  • Rent, Utilities, Mortgage Interest (no prepayment and no payment of principal) in effect as of Feb 15th 2020 paid on incurred during the covered period.

  • Interest or any other debt obligation that were incurred before the covered period.

  • Covered Property Damage Cost from public disturbances in 2020 NOT covered by insurance

  • Covered Operation Expenditures (cost for processing payroll, sales/billing software, accounting)

  • Covered Supplier Cost (made pursuant to contract or order in effect before covered period)

PPP Loan forgiveness:

  • At least 60% of loan amount must still be spent on payroll costs.

  • New non-payroll costs previously discussed are eligible for all borrowers who have not already received forgiveness.

  • Borrower can select the duration of the covered period from 8 to 24-week period immediately disbursement.

  • Alternative payroll Covered Period likely will remain.

At My Books and Taxes we recommended to get in touch with your lender to get to know more of their application process and the requirements needed for it.


If you found this information helpful please like and share. Need help? Contact us at admin@mybooksntaxes.com or book a call


Main Source: https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdf

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