Our Gift to You, Details on PPP2
The legislation is not yet law, but we want to help clients and our business community prepare for the Paycheck Protection Program (PPP) 2.0 by sharing the important details.
Who is eligible?
Any business concern, non-profit organization, housing cooperative, veteran’s organization, Tribal business concern, eligible self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative that
Employs less than 300 people
For the first, second or third quarters of 2020, had a reduction in gross receipts of at least 25% for the corresponding quarter in 2019. For the fourth quarter of 2020, this applies only to loan applications submitted on or after January 1, 2021.
Used up all prior funds
Please note that special rules apply if the business was not in operation for all of 2019.
How much?
The maximum loan amount is the lesser of:
$2,000,000 or
The average monthly payroll costs paid or incurred during either the one-year period before the loan is made or the 2019 calendar year multiplied by 2.5
Seasonal employers can choose any 12-week period from February 15, 2019 to February 15, 2020, for determining average monthly payroll costs.
NAICS-72 eligible employers (restaurants and hotels) able to get 3.5 months
What are considered Payroll Costs?
Salary, wages, vacation, parental, family medical or sick leave, group health insurance, retirement benefits, state and local payroll tax or income of a sole proprietor that is wage, income or net earnings from self-employment that is not more than $100,000 in one year as prorated for the covered period.
Payroll costs do not include federal taxes, cash compensation in excess of $100,000, payments to employees outside of the United States, Qualified sick leave where a credit is allowed under the Families First Coronavirus Response Act, and Qualified family leave where a credit is allowed under the Families First Coronavirus Response Act.
Are the same costs forgivable?
No! It was expanded. Costs still include payroll, rent and utilities. PPP 2.0 also add the following:
Facility modifications and worker protection against the virus
Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations
Certain operating costs such as cloud software and computing services
What else changed?
EIDL advances and grants do not need to be included in income
The amounts excluded from income are deductible – what a relief! The bill clarifies that qualifying business expenses paid with forgiven PPP funds will still be tax deductible.
PPP 2.0 provides a simplified forgiveness process for loans up to $150,000
Please call or email Colleen or Angel for any questions. Blackbird Accounting is excited to help businesses navigate through to the other side of these challenging times.
