Date set for the limited reopening of the PPP
The Paycheque Protection Program (PPP) will reopen Monday for some lenders and borrowers, the Small Business Administration and the United States Treasury said on Friday.
The SBA and the Treasury said in a press release that initially only community-based financial institutions that serve minority and women-owned businesses will be able to provide loans. Specifically, these community-based financial institutions can start lending to PPP borrowers for the first time on Monday and to PPP borrowers for the second time on Wednesday.
The window to apply for recoverable PPP loans will open to all lenders “shortly thereafter,” according to the press release, which did not specify a date. The closing date for the new PPP is March 31.
Congress Relaunched $ 900 Billion PPP COVID-19 Relief Bill which was enacted on December 27. The original PPP provided for $ 525 billion in forgivable loans more than five months before ceasing to accept applications in August. The new PPP has 284.5 billion dollars, including 35 billion dollars for the first loans and 15 billion dollars reserved for community financial institutions.
The SBA and the Treasury on Wednesday evening released guidance for the restarted PPP, which shares many of the same rules as the old PPP, but also has significant differences. The guidance is in the form of three documents, as follows:
- A 82-page provisional final regulations (IFR) called “Temporary Changes to the Business Loan Program; Paycheck Protection Program as amended by the Economic Aid Act, ”which consolidates eight months of published rules for PPP forgivable loans for first-time borrowers and incorporates changes made by the Economic Assistance Act. small businesses, non-profit organizations and hard-hit sites, PL 116-260.
- A 42 page IFR called “Temporary Changes to the Business Loan Program; Paycheck Protection Program Second Draw Loans ”, which sets guidelines for new PPP loans to businesses that have already received a PPP loan.
- A three page document called “Guidelines on Access to Capital for Minority-Owned, Underserved, Veteran and Women’s Businesses,” which includes a commitment from the SBA to ensure that at least the first two days of the window PPP applications are open exclusively to applications from community financial institutions.
The SBA and Treasury press release provided a brief list of major PPP updates, presented below. A more detailed summary is available in this JofA item.
Main PPP updates
- PPP borrowers can set the period covered by their PPP loan to be anywhere from eight to 24 weeks to best meet their business needs. To be eligible for full loan cancellation, borrowers will need to spend at least 60% of their PPP loan funds on payroll over the period covered. Previously, PPP borrowers had to choose an eight week covered period or a 24 week covered period.
- PPP loans cover additional expenses eligible for loan cancellation, including operating expenses, property damage costs, supplier costs, and worker protection expenses;
- Program eligibility is broadened to include 501 (c) (6) organizations, housing co-ops, and direct marketing organizations, among other types of organizations.
- The PPP offers greater flexibility and a clearer definition of seasonal employees.
- Some existing PPP borrowers may apply to change their first-draw PPP loan amount.
- Some existing PPP borrowers are now eligible to apply for a second draw PPP loan.
In general, borrowers are eligible for a second-draw PPP loan of up to $ 2 million, provided they have:
- 300 employees or less.
- Has used or will use the total amount of its first PPP loan no later than the date scheduled for the disbursement of the second PPP loan to the borrower. The IFR also specifies that the borrower must have spent the total amount of the first PPP loan in eligible expenses.
- Has experienced a reduction in revenues of 25% or more in all or part of 2020 compared to all or part of 2019. This is calculated by comparing the gross revenues of any quarter of 2020 with an applicable quarter in 2019, or, in a provision Added in the IFR, a borrower who was in business for all four quarters of 2019 can submit copies of their annual tax forms that show a reduction in annual revenue of 25% or more in 2020 compared to 2019.
Accounting firms can prepare and process PPP applications on the CPA business financing portal, created by AICPA, CPA.com and fintech partner Biz2Credit.
AICPA experts discuss the latest news on PPP and other small business support programs at a bi-weekly virtual town hall. The webcasts, which offer CIP credits, are free to AICPA members. Go to AICPA town hall series web page for more information and to register.
the AICPA Paycheck Protection Program Resource Page houses resources and tools produced by the AICPA to help cope with the economic impact of the coronavirus.
For more information and stories on the coronavirus and how CPAs can handle the challenges of the outbreak, visit JofA‘s coronavirus resource page or subscribe to our email alerts for the latest PPP news.
– Jeff drew ([email protected]) is a JofA senior editor.