The second draw Paycheck Protection Program (PPP) program has been approved by lawmakers and is intended to go into effect as early as January 6th, 2020. The program will increase ongoing support for small businesses in covering payroll related expenses. Congress has revised the terms of the new PPP in favor of the borrower. The bill was passed to expand on-going support for businesses struggling to meet payroll cost and sustaining employment ratio.
The scope of the PPP program’s covered expenses has been expanded to include four additional categories of business management. 40% of the total facility can be used under these newly added categories that include operational expenses, property repair expenses, business payments to suppliers and protective equipment (PPE) acquired for employee safety.
What’s included in operational expenses?
Operational expenses include payments for services such as software development, cloud computing, outsourced accounting, and other similar contracted expenses.
What’s the scope of property repair expenditures?
This refers to the maintenance of the property damaged during 2020 by the public and not covered under an insurance policy.
Which payments to suppliers qualify under loan forgiveness?
This includes payments made to suppliers under a contract, purchase order or order for inventory in effect before taking out a loan that was essential to the borrower’s operations when the expenditure was made.
What’s included in protective equipment for the worker?
This includes the purchase of personal protective equipment (PPE) to be used by any employees in the production and distribution of products or services. The protective instruments can be purchased to help small businesses in complying with safety guidelines from state and local regulations.
What businesses are qualified for the second round PPP?
Almost all businesses are eligible for this round of PPP, with the exception of political activities and lobbying, which are restricted from applying for or receiving PPP funds. The restriction is expanded to include businesses with extensive trade dealings with China or companies with Chinese residents on their board of directors.
All other businesses are eligible for the PPP loan including 501(c)3 Non Profit Organizations. For those businesses in the restaurant, live entertainment, theater or venue industries, the amount of the funded amount is actually increased.
I already received funding from the first PPP loan, Can I still apply for the second draw?
Yes, if you meet the conditions described in the PPP loan update. The deadline for the second draw PPP loan is March 31, 2021. However, we suggest completing the application process on an immediate basis.
Further, relaxation is provided to the borrower as procedural formalities for the forgiveness is relaxed, payments made under payroll expenses utilizing PPP loan are declared to be tax-deductible expenses. Details about the mentioned changes are discussed in detail on the PPP loan update. Further, the borrower is given the choice in time for utilization of the funds proceeds from 8 weeks to 24 weeks as a qualifying period for forgiveness.
The lawmakers seem to be committed to serving the country with extensive financial supports with second draw PPP and Economic Injury Disaster Loan. We are committed to providing professional advice in areas like a professional review for the loan application, filing of the regulatory returns, bookkeeping, tax planning, tax filings, risk advisory, financial advisory to ensure ease and peace of mind in your professional life.