At least $15 billion is being set aside for First Draw loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income neighborhoods. The PPP will open to all participating lenders shortly thereafter. January 11, 2021: To promote access for smaller lenders and their customers, SBA will initially only accept First Draw loan applications from community financial institutions starting on January 11, 2021. Under the the CAA, forgiven funds are excluded from gross income and expenses remain deductible. 2020-27, which had stated that expenses paid with forgiven PPP funds were not deductible. The SBA has stated that it intends to also issue a consolidated rule governing all aspects of loan forgiveness and the loan review process. This post details these changes, as explained by the recent SBA guidance. The second draw loan program, which closes March 31, 2021, contains stricter eligibility requirements and a lower loan limit, but it retains many of the original terms and conditions of the PPP program. The Economic Aid Act authorizes a second round of PPP loans (called “Second Draw loans”) to borrowers who have already received a PPP loan. Increases to First Draw loans, allowed under several narrow circumstances (including a recalculation for some partnerships, seasonal employers, and farmers and ranchers), are available only if forgiveness for the First Draw loan has not been granted and only under the conditions detailed below. This new calculation can be used (1) to apply for a First Draw loan, (2) to request an increase to a First Draw loan (as long as forgiveness has not been received), and (3) to request a Second Draw loan, if otherwise eligible. The Economic Aid Act provides a new loan calculation for self-employed farmers based upon gross Schedule F income, rather than net Schedule F income. New Loan Calculation for Self-Employed Farmers These loans are provided under the same general terms and with the same limits as the initial PPP loans, with some key enhancements made by the Economic Aid Act. The law reopens the PPP program (through March 31, 2021) to allow First Draw (first-time) loans to businesses that did not receive them in 2020. In sum, the new law authorizes the following: First Draw PPP loans Interim Final Rule 2021-0002 details the Second Draw PPP program. This IFR governs first-time PPP loans made under the Economic Aid Act, as well as applications for loan forgiveness on existing PPP loans where the loan forgiveness payment has not been remitted. Interim Final Rule 2021-0001 details the terms of the PPP, as amended. The SBA released initial guidance for the reauthorized PPP on January 5, 2021.
SBA guidance states that the total program allocation for guaranteed loans through the PPP is $806,450,000,000 (in 20). The CAA’s Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) allocates an additional $284 billion to a reauthorized and revised PPP. At the close of the program on August 8, 2020, $525,012,201,124 in loan funds were distributed, and $133,987,798,876 remained on the table. Forgiven loan proceeds are excluded from gross income, and the CAA clarified that expenses paid with PPP loan proceeds remain deductible. These loans were designed to be forgiven if program requirements are met. The PPP, implemented by section 1102 of the CARES Act, expanded the Small Business Administration (SBA) 7(a) loan program to provide up to $349 billion (increased by an additional $310 billion on April 24) in 100 percent federally-guaranteed loans to small employers and eligible self-employed individuals impacted by COVID-19. On Monday, December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA), which contains a $900 billion COVID-19 relief package that, among many other initiatives, reauthorizes and modifies the Paycheck Protection Program (PPP). The agency also issued forgiveness guidance and new forgiveness applications.
#Ppp gross receipts test how to
SBA released guidance regarding how to calculate revenue reduction and loan amounts for a Second Draw PPP loan. Note: On January 19, the PPP was opened to all lenders.
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