New PPP Guidance Issued by SBA

The U.S. Small Business Administration (SBA) and Treasury issued guidance late Wednesday night for the reconstituted Paycheck Protection Program (PPP).

PPP2

Paycheck Protection Program funding is available to businesses that previously received a PPP loan. Businesses are eligible for a second PPP loan of up to $2 million, provided they have 300 or fewer employees, have used or will use the full amount of their first PPP loan, and can demonstrate a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.

Loan Terms

As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. PPP2 also makes the following expenditures potentially forgivable:

• Worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
• Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
• Covered operating costs such as software and cloud computing services and accounting needs.

To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks.

PPP1

Borrowers who did not receive proceeds from the original PPP are eligible if they fall into one of the following categories:

• 500 or fewer employees that are eligible for other SBA 7(a) loans.
• Sole Proprietors, independent contractors, and eligible self-employed individuals.
• Not-for-profits, including churches.
• Accommodation and food services operations with fewer than 300 employees per physical location.

Loan Forgiveness

The new bill also creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if the borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The SBA has 24 days of the bill’s enactment to create the simplified application form.

Need assistance with the PPP?

KRS professionals are available and happy to assist with these programs and questions. Please contact us if you have any questions, concerns, or need advisement during this unprecedented time. You can also visit the KRS Coronavirus Resources Page for additional information.