Key Changes and Upcoming Deadlines
The U.S. Small Business Association and Treasury re-opened the Paycheck Protection Program (PPP) on January 11, 2021. Initially, only community financial institutions that serve minority- and women-owned businesses can loan to first- and second-time PPP borrowers. The application window is expected to open to all lenders soon after, but a date has not been specified. The deadline for loan applications is March 31, 2021.
The PPP was renewed as part of the $900 billion COVID-19 relief bill signed into law on December 27, 2020.
The updated PPP has some key differences from the original program:
- PPP borrowers can now determine their PPP loan’s covered period, between eight and 24 weeks. To be eligible for full loan forgiveness, borrowers must spend at least 60% of their PPP loan funds on payroll within the covered period. Previously, PPP borrowers were required to choose either an eight- or 24-week covered period.
- New PPP loans cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
- The program’s eligibility now includes 501(c)(6) organizations, housing cooperatives, and direct marketing organizations, in addition to other organizations.
- Offers greater flexibility for seasonal employees.
- Specific existing PPP borrowers can modify their first-draw PPP loan amount.
- Some existing PPP borrowers are eligible to apply for a second-draw PPP loan.
PPP borrowers may qualify for a second PPP loan of up to $2 million if they meet the following requirements:
- Have 300 or fewer employees.
- Used the full amount of their first PPP loan on eligible expenses on or before the expected disbursement date for the second PPP loan.
- Faced a revenue reduction of 25% or more in 2020 compared with 2019. This reduction is calculated by comparing gross receipts in any 2020 quarter with the same quarter in 2019, or show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.
California Relief Programs – Deadlines Looming
- The application deadline for a California Relief Grant of up to $25,000 for small businesses was extended until Wednesday, January 13, 2021.
- The deadline to reserve the California Main Street Small Business Credit is Friday, January 15, 2021. Businesses may apply if they had more full-time equivalent employees in July through November of 2020 than during the second quarter of 2020, even if they are currently closed.
RJI CPAs Can Help
The team at RJI CPAs is available to help you navigate the process of applying for a PPP loan or California relief program.