On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was signed into law. The CAA’s significant COVID relief stimulus includes an additional $284 billion in funding for small businesses through the Paycheck Protection Program (“PPP”). The CAA also makes a number of important changes to the PPP loan program that impact all PPP loan borrowers.
Here are some of the key provisions from the CAA and the SBA’s January 2021 guidance concerning the PPP loan program:
- New (first-time) applicants that did not receive a PPP loan in 2020 may now apply (max loan amount of $10 million)
- A qualifying business that previously received a PPP loan in 2020 may apply for a “Second Draw” PPP loan under certain circumstances (max loan amount of $2 million) if the business:
- Exhausted all funds from the first PPP loan;
- Employs no more than 300 employees; and
- Experienced at least a 25% a decline in gross receipts in Q1, Q2, Q3, or Q4 2020 as compared to the same quarter in 2019
- Both first and Second Draw PPP loan applications must be made by the current deadline of March 31, 2021
- Applicants may now choose their own covered period in which to spend the PPP loan proceeds (minimum of eight weeks up to a maximum of 24 weeks), providing more flexibility for workplace decisions
- PPP loans are not included as taxable income, and expenses paid with PPP funds are now tax deductible
- Expanded eligible non-payroll expenses may now include operational expenditures such as software, PPE, and safety improvements like air filtration and employee health screenings
- A further streamlined one-page forgiveness application for all PPP borrowers with loans under $150,000
The SBA began accepting new and Second Draw applications through qualifying lenders in mid-January, 2021. Importantly, PPP loan applications are accepted on a first-come basis, and the program is expected to close again once the current funds are exhausted. If you have questions about a new or Second Draw PPP loan, or need help connecting with a participating lender, please contact our Firm’s experienced lending attorneys.
