Does Your Business Qualify for the New Paycheck Protection Program Loans?

Round #2 is upon us and the question of the day is: Does your business qualify for a second loan? The recently enacted Consolidated Appropriations Act (CAA) permits another loan (up to a maximum of $2 Million) if the following are satisficed:

• Your business employs no more than 300 employees per physical location;
• You have used (or will use) the full amount of your first PPP loan; and
• You can demonstrate that your business has at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Applications submitted on or after Jan. 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020.

Note that nearly every type of business structure can utilize this PPP loan. These include any for-profit businesses, certain non-profit organizations, housing and agricultural cooperatives, along with those who are self-employed/sole proprietors/independent contractors.

A few other considerations...

• Only one PPP loan draw is permitted in the second round of loans.
• Hospitality and food service industries can receive a higher draw/loan than any other type of business.
• The loan terms are calculated based upon the average monthly payroll costs in the one year prior to the loan or the calendar year.
• If the PPP loan you are requesting is less than $150,000, you may submit a certification affirming that your business meets the applicable revenue loss requirements.
• The loan may be forgivable.
• If forgiven, the loan forgiveness is not considered to be taxable income.
• Any expenses incurred in procuring the loans are tax deductible.