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Consolidated Appropriations Act makes more PPP loans available

The Consolidated Appropriations Act of 2021 (CAA), enacted December 27, 2020, expanded expenses qualifying for Paycheck Protection Plan (PPP) loans and made “second draw loans” available.

Second-draw loans are only available to businesses that employ 300 or fewer employees and have at least a 25% reduction in gross receipts. Eligible businesses can borrow up to 2.5 times the average monthly payroll costs for calendar year 2019, limited to $2 million. Businesses in the hospitality or food service industries (NACIS code 72) can borrow up to 3.5 times their average monthly payroll costs for calendar year 2019.

Businesses that haven’t had their initial PPP loans forgiven can apply for a supplemental loan to pay for expenses that previously didn’t qualify because new rules were released. This includes partnerships when the original loan didn’t include the self-employment income of the partners.

Eligible payroll costs have been expanded to include group insurance benefits, including life, disability, vision and dental insurance.

Other eligible expenses for borrowers who have not yet applied for or been granted loan forgiveness includes:

  • Covered operations costs (including software, cloud computing services, sales and billing functions, or other human resources and accounting needs.)
  • Covered property damage costs (due to public disturbances during 2020 that are not covered by insurance.)
  • Covered supplier costs (Expenditures to a supplier pursuant to a contract, purchase order or order for goods in effect before taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.)
  • Covered worker protections costs (PPE.)

The deadline to make an application for the loans is March 31, 2021.

The Small Business Administration has issued interim final rules implementing the changes in the CAA. https://www.sba.gov/document/policy-guidance-ifr-paycheck-protection-program-ppp-amended-economic-aid-act

Here is SBA information about applying for first draw PPP loans, including an application form. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/first-draw-ppp-loans

Here is SBA information about applying for a second draw PPP loan, including an application form. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans

Here is SBA information relating to applying for loan forgiveness, including updated forms. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/ppp-loan-forgiveness

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