New Relief Bill Provides Additional PPP Loans for First-Time & Previous Borrowers
On Monday evening, Congress overwhelmingly passed a $900 billion relief bill to provide assistance due to the COVID-19 pandemic. The new bill, named the Consolidation Appropriations Act, 2021, will provide more than $300 billion in aid for small businesses, extend weekly unemployment benefits, and provide stimulus payments to individuals. The bill is expected to be signed by President Trump in the coming days.
A recent summary article from Journal of Accountancy shares the following key comments about new and previous PPP loans.
Tax deductibility for PPP expenses:
- The bill specifies that business expenses paid with forgiven PPP loans will be tax-deductible, which overrules the IRS’s recently issued guidance. This applies to loans under the original PPP and any subsequent PPP loans.
Key points of the new PPP2 provisions:
- The new round of PPP loans will be available to first-time qualified borrowers from the following types of businesses:
- Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
- Sole proprietors, independent contractors, and eligible self-employed individuals.
- Nonprofits, including churches.
- Accommodation and food service operations with NAICS codes starting with 72 and have fewer than 300 employees per physical location.
- The new round of PPP loans will also be available to previous borrowers, who may apply for another loan if they meet the following conditions:
- Have 300 or fewer employees.
- Have used or will use the full amount of their first PPP loan.
- Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.