As part of Congress' recently passed COVID-19 relief bill, Congress has approved an additional $325 billion in forgivable loans for employers through the Paycheck Protection Program (PPP). The bill changes certain eligibility requirements for future PPP loans and expands what expenses may be eligible for forgiveness.
The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act limits eligibility for new PPP loans to businesses with 300 employees or less, as well as only those businesses who have suffered a 25% reduction in revenue in any quarter in 2020, as compared to 2019 revenues for the same quarter. As before, most eligible employers will be able to apply for loans up to 2.5 times their average monthly payroll costs. However, in this round, the maximum loan size is $2 million per business. Businesses in the accommodation and food services industries may receive a loan of 3.5 times their payroll costs, but subject to the same $2 million maximum loan amount. Additionally, for the first 60 days of the new loan program, $2 billion has been set aside to be given exclusively to businesses with 50 or less employees.
Employers will be eligible to have their entire PPP loans forgiven if they spend 60% of the loan on payroll costs over a flexible time period of eight to 24 weeks, as determined by the employer. For purposes of PPP loan forgiveness, eligible payroll costs have been clarified to include additional group insurance payments for vision, dental, disability, and life insurance.
The bill also expands the PPP's forgivable expenses to include supplier costs on existing contracts, including for protective equipment, perishable goods, and technology expenditures. The bill dedicates $15 billion to live venues, theaters, museums, and zoos. It also specifies that ineligible business now include publicly traded businesses, businesses who have not used (and do not intend to use) their original PPP loan, entities affiliated with China or foreign agents, and entities receiving a separate grant under the live venues grant program.
Once signed into law by the President, the bill's provisions will take immediate effect.
Originally Published by Ice Miller, December 2020
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