SBA Issues New PPP2 Guidance for Businesses

Summary of Reconstituted Paycheck Protection Program

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Good news for businesses as guidance from the U.S. Small Business Administration (SBA) and Treasury has been issued regarding the second round of Paycheck Protection Program (PPP) funding.

“It was expected that there would be changes and corrections in interpretation and meaning following the COVID-19 relief bill, and numerous SBA announcements with clarifications on the applicability for businesses and advisors,” states Beth Swanson, senior tax consultant with KCoe Isom.  “This is welcome information to begin to address some areas of uncertainty stemming from the original relief bill signed in December.”

Through the issuance of two interim final rules (IFRs) by the SBA and Treasury, they have established consolidated rules for PPP forgivable loans for first-time borrowers and outlined changes, as well as laid out guidelines for new PPP loans for second-time loan applicants.

Here is a high-level summary of some of the key areas addressed under the SBA and Treasury’s new PPP2 guidance:

  • New parameters set for PPP2 (and differences from the original PPP)
    • PPP funding available to businesses that previously received a PPP loan
    • Eligibility for a second PPP loan of up to $2 million (if you have less than 300 employees, have used or will use the full amount of first PPP loan, and can show a 25% gross revenue decline in any 2020 quarter compared to the same quarter in 2019)
    • Maximum loan amount has been substantially reduced from $10 million to $2 million
    • Loans can still be forgiven but a business must spend at least 60% of the funds on payroll
  • ‘Fresh’ PPP loans are available to first-time borrowers within five defined groups (including businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans, and sole proprietors, independent contractors, and eligible self-employed individuals)
  • Allowance for borrowers who returned previous PPP loan can reapply for maximum amount
  • Expanded expenses and new parameters for loan forgiveness eligibility
    • Newly added: covered worker protection and facility modification expenditures for COVID-19 compliance; essential expenditures to suppliers; covered operating costs such as software and cloud computing services and accounting needs
  • Simplified forgiveness application process for loans of $150,000 or less
  • Repeals PPP borrower requirement for deduction of Economic Injury Disaster Loan (EIDL) advance from PPP forgiveness amount

KCoe’s advisory team is performing a comprehensive review of the 120+ pages of IFR language in order to share greater details on this new PPP guidance from the SBA and Treasury.  We will provide updates and more information on how these rules work and what to do next to maximize benefits and make proper financial, tax and business decisions.

Contact a KCoe advisor for questions regarding new PPP2 guidance and eligibility rules.


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