Ho Ho Ho - More PPP Funds And Deductibility Issue Fixed

By Marr Jones & Wang

December 22, 2020

It’s a Christmas Miracle, Congress finally agreed to pass another Stimulus Package which probably will not be the last.

Within the over 5,000 pages of legislation there is news on the PPP front. We are still reviewing the legislation and these are just the immediate highlights.

● First, expenses paid using PPP loan amounts and in particular forgiven loan amounts can be deducted as expenses.

● Second the PPP is back. If you did not get a PPP loan this year you will have another opportunity. And if you not receive the maximum amount in your loan you have the opportunity to go back and get the difference. The same eligibility criteria for loans made under the CARES Act applies to new first time loans.

● Third, if you were approved for a PPP loan there is a second draw provision for those employers with less than 300 employees and who have suffered a reduction of at least 25% in gross receipts compared to the same calendar quarter in 2019. The loan amount is 2.5 times your average monthly payroll over the 12 months the loan is made or in 2019. Loans are capped at $2,000,000. Special rules for seasonal employers.

● For entities in NAICS Code 72-lodging and food, the loan amount is 3.5 times the payroll cost.

● Expanded eligibility for non-profits to now include 501(c)(6) organizations.

● PPP loans may be used for the same purposes as in the CARES Act with the same requirement that at least 60% be used towards payroll costs.

● Added covered expenses include “worker protection expenditures”.

● On the forgiveness front if your loan is $150,000 or less it will be forgiven based on a one page form.

There is still much to unpack from the legislation but so far it is positive.

With apologies to the author and everyone else, we leave you with our version of “T’was The Night Before Christmas”

T’was the week before Christmas, when all through the house
The voting was occurring, it’s time to get out;
The Senate was trying to scuttle the bill
In hopes that the Fed would not take care
Businesses were asking would they be spared?
And nightmares of another PPP haunted their dreams
Would there be another round for me?
Waiting and waiting like a long winter nap
When on the Senate floor arose such a clatter,
We leapt to the web, oh what was the matter?
Continuing resolutions passed in a flash,
Please oh please let another PPP pass;
Additional funds better than new-fallen snow,
Please forgive what we have spent below,
When what to my wondering eyes did appear,
Another round of funds for us oh dear,
In goes my application lickety split,
The bank asks, “who do think I am, St. Nick?”
Get your applications in, no time to waste;
We need the money now, post haste.
Now, don’t make it too hard for it to be forgiven!
A wink of his eye and a twist of his pen;
Soon gave me to know I had the money in hand
Deductibility of expenses is finally here;
What could be better for Christmas cheer?
A second round if our business was bad,
We are forced to admit it although it’s sad;
Will the SBA issue some guidance?
We need a lawyer; it’s rocket science.
But I heard him exclaim, ere he drove out of sight—
“Happy Christmas to all, and to all a good night!”