Below is a table that highlights some of the changes between the original PPP offering and the one signed earlier this week. Keep in mind that Treasury and the SBA must still codify these changes, so the finished product may deviate from the legislative intent as outlined below:
| Feature Changed | Original PPP | PPP2 |
| Total Available | $669 billion | $284 billion |
| Maximum Loan Amount | $10 million | $2 million |
| Maximum Number of Employees | <500 | <300 |
| Employee Retention Tax Credit | Could not Claim | Can Claim |
| Expanded Loan Uses | Cloud computing, software, COVID protection (PPE) | |
| Now Qualify | 501 (c)(6) non-profits, including chambers of commerce and other business groups | |
| Do not Qualify | Political lobbying firms or companies with significant ties to China | |
| Extra Help | $15 billion to fund live venues, movie theaters, and cultural institutions |
As with PPP round #1, it is likely that the actual SBA guidelines will impact the scope of these changes and their implementation.
The recently signed Consolidated Appropriations Act of 2021 not only established another round of PPP funding (a/k/a PPP2), but also set up another round of EIDL “first advances”, as well as provided some additional benefits for eligible borrowers. These included the following:
- PPP2
- The program will expire 3/31/21
- The new guidelines must be enacted within 10 days of signing (1/6/21)
- Borrowers will continue to choose the covered period of 8 or 24 weeks
- Businesses not in operation as of 2/15/2020 are not eligible for PPP funding
- Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning 2/15/19 thru 2/15/2020
- The amount of funding will continue to be based on 2.5X eligible expenses, except for businesses in NAICS code 72, which will be based on 3.5X eligible expenses
- PPP Forgiveness
- The SBA is required to create a one-page simplified forgiveness form within 24 days of enactment (1/20/21)
- Borrowers will be required to retain relevant records related to employment for 4 years and other records for 3 years after the loan is either forgiven or paid off
- Expenses forgiven will be deductible from Federal Income Tax
- Other Lending-related Items of Interest
- Borrowers with existing SBA loans will receive an additional 3 months of principal and interest payments starting in February 2021. Borrowers in underserved markets will receive the same payments for an additional 5 months (up to $9,000 per month)
- SBA 7(a) loan guarantees will be increased to 90% thru the end of the 2021 fiscal year
- SBA Express loans will again be increased to $1 million, thru the end of fiscal year 2021
- The SBA may establish a 504 Express Loan Program, thru the end of fiscal year 2023
- The covered period for EIDL “first advances” has been extended to 12/31/21, and the SBA will have up to 21 days to grant these funds
- There are other set-asides and adjustments to be made to address loans to underserved markets and the SBA has 10 days (1/6/21) to develop a plan to address barriers to capital for these markets
Note: Treasury and SBA have a short timeline to generate a significant amount of guidance for borrowers and lenders alike. As a result, it is likely that the PPP2 program may not become available to applicants until mid-January. Please advise clients that we cannot provide them more specific guidance until these details have been worked-out. This is also true for clients that may be interested in seeking forgiveness of their existing PPP loans.
