New PPP Guidance from the Small Business Administration and Treasury
January 11, 2021
Update: On March 30, 2021, President Biden signed the PPP Extension Act into law. This extends the Paycheck Protection Program to May 31, 2021 and gives the SBA until June 30, 2021 to to process pending applications that are submitted on or before May 31, 2021.
On January 6, the Small Business Administration (SBA) and Treasury issued new guidance for the Paycheck Protection Program (PPP). The guidance features two interim final rules – for the PPP as Amended by the Economic Aid Act and newly-introduced PPP Second Draw Loans (PPP2).
Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act
The Treasury will now allow first time borrowers to use payroll costs incurred in either calendar year 2019, the 12 months before the loan application, or calendar year 2020 to calculate the maximum loan amount they require. Details of eligibility for loans can be found in this article. The guidance also outlines how to calculate maximum eligibility for loan forgiveness, which we previously discussed here.
Interim Final Rule on Second Draw PPP Loans
Key provisions from the ruling:
Note: if PPP1 forgiveness amount is recorded in 2020, it is excluded from gross revenue calculations.
The key differences between the first and second PPP:
SBA Opens PPP Loan Portal
The SBA’s portal for PPP loan applications will reopen on January 11 to select applicants, i.e. those who did not receive a loan in the first draw and who go through what the SBA has termed “community financial institutions” (CDFIs, minority deposit institutions, certified development companies and microloan intermediaries). Applications for PPP2, again through these community lenders, will be allowed beginning January 13. The SBA has not yet announced when the PPP will be reopened to all lenders. Lending will be available until March 31, 2021 (as of March 30, 2021 this has been extended to May 31, 2021).
* This definition is taken from the IFR for Second Draw Loans.
We will continue to provide updates and clarity on the latest guidance as we receive and review it. If you have any questions about how these rules may affect you, please contact a member of our tax team at 404-874-6244 or fill in the form below and someone will be in touch.
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