PPP2 - The Quick And Dirty - More To Come...
The Bottom Line:
PPP2 targets smaller entities this time
Provisions for hardest-hit & vulnerable businesses
Good news for forgiveness & deductibility
The Consolidated Appropriations Act
Encouraging news for some small business owners: Congress has passed the new relief bill allocating roughly $285 billion to small businesses. For all 5,593 pages see here but the highlights are, in short: this is Good News for a Good Day.
More Focused Eligibility
This money is solely for (1.) businesses with less than 300 employees per physical location, who (2.) have experienced revenue declines of more than 25% in any quarter this year as compared to last year and (3.) are either newly applying and qualified under the CARES act or have used their first PPP loan amount in full.
Non-profits, tribal businesses, veterans organizations, and “small agricultural cooperatives” are still eligible and inclusion has expanded to some small news organizations, housing cooperatives, and 501(c)(6) non-profits.
Increases on an existing PPP loan can also be requested. And if a business opened after February 15, 2020, other methods may be used for gross receipts comparison.
More Forgiving Forgiveness
This bill has, generally speaking, expanded the definition of forgivable expenses, simplified the process of applying for loan forgiveness and—drum roll—determined that expenses funded by forgiven PPP loans *are* tax- deductible.
Previously stipulated forgivable expenses involve payroll, payroll-related expenses/insurances, rent/mortgage interest etc. – this definition has been expanded to include (non-insurance-covered) 2020 property damage costs, expenses involved in many businesses’ transition to remote work (software, accounting, cloud computing, etc.), pre-existing supplier contract costs, and costs incurred protecting workers’ health or complying with health & safety regulations.
The forgiveness application process (for PPP loans under $150K) has been vastly simplified, to a one-page certification listing the number of employees the loan helped retain, the estimated loan amount spent on payroll costs and the total loan amount. Additional substantiation could be required at any time – as always, all supporting details must be recorded and retained.
More good news re forgiveness and extensions - the required date by which to restore full-time employees’ salaries & wages to pre-Covid amounts has been extended.
Helping the Hardest-Hit & Most Vulnerable
Decimated live arts organizations– meaning a “live venue operator or promoter, theatrical producer, or live performing arts organization operator, a relevant museum operator, a motion picture theatre operator, or a talent representative”—will particularly benefit, especially those who retain less than 50 full-time employees. During the first two weeks, grants will be awarded specifically to those who have suffered 90% revenue losses.
Up to $40 billion is allocated to vulnerable businesses and those catering to the most vulnerable—minority-owned businesses, those located in a “Low to Moderate Income” area, and businesses with 10 or fewer employees.
Existing Small Business loansor 504 Microloans (or those approved before September 20, 2021) may qualify, depending on eligibility, for up to 8 months of forgiveness on principal and interest payments.
Finally, you may deduct 100 percent of your business meals that take place in a restaurant for 2021 and 2022– this is to encourage small business deductibles and stimulate patronage for the hard-hit restaurant industry.
For those organizations that serve underserved communities, above-the-line deduction for qualifying charitable contribution has been extended through 2021.
There are always eligibility rules to keep in mind – for instance, ineligible organizations include political/lobbying organizations, businesses affiliated with entities in the People’s Republic of China (?), those registered under the Foreign Agents Registration Act, those that received a grant under the Shuttered Venue Operator Grant program, and publicly held companies.
Regulations and amendments are evolving rapidly and will continue to evolve — always consult with your accountant or other financial advisor before assuming eligibility or forgiveness. With sound research and a little help from the federal government, we’re all sure to have a better day together.