The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, in Section 311, provides a new round of PPP loans for eligible “Hard-Hit Businesses”. Borrowers must have suffered a 25% reduction in gross receipts during the first, second, third or fourth quarter of 2020 relative to 2019 and have 300 or fewer employees. Previous recipients of PPP loans can get a second PPP loan. This is a small part of the Consolidated Appropriations Act, 2021 that was passed on December 21, 2020.
As with the original PPP loans, the maximum loan amount is the lesser of $2 million or 2.5 times the average monthly payroll costs for 2019. Special provisions dealing with seasonal employers and new businesses are similar to the corresponding provisions applicable to the original PPP loans. Forgiveness, again, is based on spending the loan funds during the “covered period” on eligible costs. The eligible costs are a little broader than they were for the original PPP loans. Expenditures for payroll, mortgage interest, rent, utilities and also worker protection expenditures, covered supplier costs and property damage costs are eligible for forgiveness. Again, at least 60% of the forgiven amount must be spent on payroll.
Don’t wait to apply for this if you are eligible. Because the most significant problems with PPP loans have been cured with this new legislation, I believe these loan funds are going to go fast.
Mark S Gleason CPA