On Wednesday, January 6, the Small Business Administration (SBA) and Treasury issued guidance regarding the Paycheck Protection Program (PPP).
Two interim final rules (IFRs) are released to provide business owners more clarity on the changes of the program:
1. Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid A
- This is an 82-page IFR, intended to summarize the rules governing new PPP applicants and applications under existing PPP loans related to loan forgiveness where the forgiveness payment has not been remitted.
- The document also details how the Treasury authorizes first-time PPP borrowers to utilize 2019 or 2020 to calculate their maximum loan amount.
2. Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans
- This is a 42-page IFR that outlines the implementation of section 311 of the Economic Aid Act for second-time borrowers.
Second-time PPP Borrower Eligibility
Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. However, in general, eligibility for second time borrowers are narrower, they must meet the following criteria:
- Business should not exceed 300 employees and must have experienced a revenue decrease of 25% or greater in 2020 relative to 2019.
- Full amount of First-draw PPP loan received should have been or will be used, on or before the expected date on which the Second Draw PPP Loan is distributed to the borrower.
- Borrower must have spent the full amount of the first PPP loan on eligible expenses based on PPP guidelines
The new rules made in the two IFR guidance are part of the Consolidated Appropriations Act of 2021, signed into law on Dec. 27, 2020.
For our clients, it should be noted that the last day to apply for and receive a PPP loan is on March 31, 2021. As this is an ongoing topic, we will continue to update you further on new releases and breakdowns of the new policies.
Should you wish to know your eligibility for a PPP loan, you may book a consultation with us at https://calendly.com/levine-and-associates.