Stimulus and PPP2
Although nothing is ever certain in DC these days, we are hearing very positive things about another stimulus package. Differences exist on 2 main items - liability protection and state/local aid. However, there appears to be bipartisan support for most parts of another stimulus package and what is being referred to as "PPP2".
Here are a few highlights based upon what we know as of today (Dec 17th at 3:00!!)
- Additional funding for PPP2 would look at 2 sets of borrowers
- 1st time borrowers who missed out on PPP1;
- 2nd draw borrowers who have had >30% drop in revenue in 2020 (when compared to same period in 2019)
- PPP2 loan amounts would be calculated similar to PPP1 (2.5 times avg. monthly payroll)
- PPP2 loans can be forgiven if funds are spent on eligible expenses within a defined covered period (8 or 24 weeks)
- Eligible expenses are the same as before (payroll, utilities, rent and/or mortgage interest) but will be expanded to include PPE expenditures due to COVID and a few other items.
- There will be the same 60/40 requirement on payroll vs non-payroll spend on eligible expenses.
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The expectation is that the non-deductibility issue on forgiven PPP loans will be fixed (for both PPP1 and PPP2). However, although Congress is aligned on this, the Treasury Department is pushing back so it is too soon to tell where this lands.
- Very good chance the simplified forgiveness level will be raised from $50K to $150K as well as a semi-simplified process for $150K - $2M
- Very likely additional funding will be made available for EIDL grants
- There is likely to be an extension of the SBA 7a loan subsidies that existed before
Beyond the above small business items, the stimulus package will likely include extension of unemployment benefits, extension of student loan deferrals, and possibly additional stimulus checks (perhaps $600 rather than $1,200)
THIS REMAINS A VERY FLUID SITUATION AND COULD BE FINALIZED OVER THE HOLIDAYS. We will keep an eye on this and suggest you do the same in case there is interest on your part of participate in a PPP2 loan if approved.
