The new COVID relief package passed last night and will likely turn into law today.
Highlights for businesses regarding existing Paycheck Protection Program (PPP) loans:
1) Expenses paid with PPP funds WILL be fully deductible, so the money from PPP Round 1 is now post-tax, fully tax-free dollars.
2) For loans under $150,000, the forgiveness application will be reduced to one page and the bank will not require any documentation, only the borrower's self-certification that they spent the funds consistent with the program requirements.
3) For loans between $150,000 and $2,000,000, the forgiveness application and documentation will be simplified.
But the big addition is that there is the possibility for a second PPP loan, similarly forgivable, for businesses that experienced significant revenue declines during 2020.
This will require a reduction in gross receipts of 25% in a single calendar quarter of 2020 versus that same quarter in 2019. There are provisions for businesses that were not in existence for any or all of 2019, but they will still require a demonstrated 25% loss of revenue versus some prior quarter.
The text of the bill was not available until late on the 21st, so I would recommend you be patient with your bank, but also let them know your interest if you think you will be eligible. Feel free to reach out to me if you have any questions. We will keep updating as we know more.