Paycheck Protection Program: PPP 2.0

DISCLAIMER:

  • The materials and information provided in this webinar and on NFIB's website are for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney and/or tax professional to obtain advice with respect to any particular issue or problem.
  • This is based on information available by 1/5/21.
  • SBA Applications are not live yet. Guides will be made available soon.
  • PPP Application forms will be available at SBA.gov. Check TODAY with your lender to see if they're participating in PPP 2.0

Who is Eligible?

Businesses that need an initial PPP*

·     Businesses with 500 or fewer employees
·     501(c)(6) organizations (300 employees; some lobbying restrictions apply)

Businesses that need a second PPP*

·     Businesses who undercalculated initial PPP and need more $ and haven't applied for forgiveness
·     Businesses with 300 or fewer employees, including sole proprietors, independent contractors and self-employed, that have used or will use their first PPP (don't need to have applied for forgiveness yet) AND can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
·     Businesses must have been in operation on or before February 15, 2020.

Calculating PPP Loan Amount

PPP loan is calculated by:

·     2.5 x average monthly payroll costs for 2019
·     For PPP second loan only, if NAICS Code 72 (hospitality/restaurants), 3.5 x average monthly payroll costs for 2019

Second PPP loan limits:

·     $2 million

Calculation 2019 Payroll x 2.5 (or 3.5) divided by 12 (months) = maximum PPP loan 

Owner-employee compensation replacement (if not a W-2 employee which would be included in above) is based on 2019 Schedule C net profits, line 31. Divide that number by 12 and multiply that number by 2.5 which is 10 weeks' worth of net profits for 2019.

Non-employer PPP loans are calculated solely from 2019 Schedule C (or Schedule F) net profits (as above). The maximum loan amount for non-employer borrowers is $20,833.

Forgivable Expenses

·     Payroll
·     Utilities (gas, electricity, water, telephone, internet)
·     Rent (real and personal property)
·     Mortgage Interest
·     Operations expenditure*
·     Property damage cost*
·     Supplier cost*
·     Worker protection expenditure*

* New PPP 2.0 forgivable expenses

Review SBA's PPP Forgiveness FAQs (dated 8/4/20) for more information.

Other Applicant Concerns

·     No credit check is required. Some PPP lenders will check applicant's personal credit, so if this is of concern, be sure to ask before you apply.
·     There is no personal guarantee.
·     Normal SBA collateral requirements are waived.

Tax Deductibility for PPP and EIDL Grant Expenses

The legislation provides that business expenses paid with forgiven PPP loans and Economic Injury Disaster Loans (EIDL) are tax-deductible.

·     The bill clarifies that "no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided" by Section 1106 of the CARES Act (which has been redesignated as Section 7A of the Small Business Act).
·     This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what NFIB and hundreds of other business associations have argued was Congress's intent when it created the original PPP.
·     This provision applies to loans under both the original PPP and subsequent PPP loans.

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Economic Injury Disaster Loan (EIDL)

Still Open!

·     Six months of working capital
·     3.75% for businesses (fixed)
·     2.75% for nonprofits (fixed)
·     30 years
·     No pre-payment penalty or fees
·     Application deadline 12/31/21
·     Apply here.

Additional Funding for EIDL Advance Grants:

·     $20 billion for EIDL Advance grants.
·     Eligibility: small businesses and nonprofits in low-income communities can receive $10,000 grants.
·     Any small businesses and nonprofits in low-income communities that received an EIDL Advance previously are also eligible to receive the full $10,000 if their award was less in the first round of grants.

EIDL Grant Eligibility New Market Tax Credit Map

Watch a recording of NFIB's webinar below!

 
 

"No Small Business Left Behind"

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The Business Recovery Centers for Clackamas County provides resources for Clackamas County businesses to reopen and recover. We offer complimentary business consulting services to our community's small businesses.

Los Centros de Recuperación de Empresas del Condado de Clackamas ofrecen recursos para que las empresas del Condado de Clackamas puedan reabrir y recuperarse. Ofrecemos servicios de consultoría empresarial complementarios para las pequeñas empresas de nuestra comunidad.