New COVID Relief Package Means Updates to the Paycheck Protection Program

The latest COVID relief bill that passed Congress just before Christmas includes a number of provisions for businesses.  Most notably round one of the Paycheck Protection Program (PPP) has re-opened, and a second round is now available with different parameters than the first.  $285 billion has been allotted to the re-opened first round PPP and the new second round.  Read on for the differences and similarities between the first and second rounds of the PPP and how your business can claim funds either as a previous or new PPP borrower.

To be eligible for the second round of PPP, borrowers must

• demonstrate at least a 25% reduction in revenue year-to-year between 2019 and 2020 for a specific quarter
• have fewer than 300 employees

Borrowers of the first round of PPP may be eligible for a second round PPP loan if

• they can certify that all first round PPP funds went toward authorized uses (their first round PPP loan WILL BE forgiven if it hasn’t already)
• they complete the separate round two application

Things that have not changed between the first and second rounds of PPP include

• borrowers must use at least 60% of funds for payroll expenses
• borrowers must use the other 40% on rent, utilities, and mortgage
• a maximum of $2 million is allowed per borrower
• most businesses may draw 2.5 times payroll (see below for one exception)
• forgiven PPP loan revenue is excluded from taxable income

Changes to the second round of PPP include

• borrowers must demonstrate a 25% decrease in revenue for any quarter 2020 over the same quarter 2019
• eligibility of 501(c)6 organizations that were not included in first round eligibility
• hotels, restaurants, and other tourism industry businesses (NICS Code 72 businesses) may apply for 3.5 times (instead of 2.5 times) their payroll
• funds from the second round may also be used on PPE gear, essential supplies, and accounting

You may apply for the Paycheck Protection Program round one or round two via your preferred bank or lender, however it is the borrower’s responsibility to certify certain aspects of their application.  For this reason we recommend that you consult with your lawyer or accountant with any questions or concerns regarding your eligibility for the loan. Every business’ situation is unique and your lawyer or accountant will be most familiar with your specific circumstances.  Our friends at CenterState Bank do provide a checklist of necessary supporting steps and documents to help get you started.

Other Helpful Links

Learn more about the Paycheck Protection Program from the Small Business Administration.

Download the round one PPP application.

Round 1 Paycheck Protection Program Guidelines from the U.S. Treasury

Round 2 Paycheck Protection Program Guidelines from the U.S. Treasury

On Wednesday, January 13, we spoke with Amber Adams, Osceola Community President and Senior Vice President for CenterState Bank about these new changes to the PPP.  View that conversation below.  Please contact us at cpilkington@theosceolachamber.com if you would be interested in participating in a more in-depth closed Zoom call and Q & A on this topic.