PPP Update: Summary of Emergency Coronavirus Relief Act

Below is a summary of the proposed details on the Emergency Coronavirus Relief Act that was recently released. The proposed legislation includes significant updates to the Paycheck Protection Program (PPP). If approved, the bipartisan bill will make $267.5 billion additional funds available for PPP loans and $13.5 billion for Economic Injury Disaster Loans also overseen by the Small Business Association.

Congress is working to attach the bill to a government funding package to be approved this week. In anticipation of the approved bill, we have highlighted changes that will impact borrowers IF this bill is passed by Congress:

Changes affecting existing PPP loans IF Passed:

1. Additional eligible expenses for loan forgiveness include:

• Covered operations expenditures
• Covered property damage costs
• Covered supplier costs
• Covered worker protection expenditures

2. Changes to tax implications of PPP funds

• Confirmation that forgiveness is non-taxable
• Expenses are deductible
• No reduction in basis in the borrowing entity

3. Simplified application process for loans under $2 million

• Loans up to $150,000 will require completion of a one-page online or paper form with borrower certifications
• Loans $150,000 to $2 million will have simplified documentation requirements

4. Audit plan for borrowers who, together with their affiliates, obtained $2 million or more

• Policies and procedures for conducting audits and reviews
• Metrics used to determine which loans will be audited

Changes exclusive to the second round of PPP loans:

5. Additional PPP loan funds available

• $267.5 billion in PPP loan funds available
• Additional $13.5 billion for Economic Injury Disaster Loan funds

6. Eligible businesses looking to apply for more funding

• Size of business is now limited to 300 employees (down from 500 in round one)
• Business must have experienced gross receipts decline by at least 30% for any quarter in 2020 compared to that same quarter in 2019

7. Calculating the maximum loan amount

• Two and a half months’ worth of the average payroll for the last twelve months through date of application or2019
• Loan cannot exceed $2 million
• There will be limitations for businesses with multiple locations (aggregated total not to exceed $2 million)
• Loans for affiliated borrowers can not exceed $10 million

8. Set aside for small entities

• $25 billion of the total allotment is earmarked for businesses with 10 employees or less as of February 15, 2020

9. Increase in PPP loan round one amounts

• Requests can be made for an increase in round one amount if calculating incorrectly due to updated regulations

10. Inclusion of 501(c)(6) organizations who were previously ineligible in round one

• Organizations must have 150 employees or less
• Less than 10% of gross receipts may come from lobbying activities
• Lobbying activities cannot comprise more than 10% of total activities of the organization

Please feel free to reach out to Brixey & Meyer to help navigate the PPP loan process. We are committed to keeping our clients, friends and families posted on the latest developments. You can simply comment below, visit our website or call us at 866.760.0940.