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Continuing Small Business Recovery and Paycheck Protection Program Act


PPP - Loan Forgiveness

We’re proud to partner with NBT Bank in providing informative, timely updates on the ever-changing PPP Forgiveness regulations. Please review our webinars, EZ application update details and more to help support your business in this forgiveness process. To learn more about NBT Bank, visit: NBT Bank – Business.

 

On Monday July 28th, U.S. Senators Marco Rubio and Susan Collins announced the proposed Bill, Continuing Small Business Recovery and Paycheck Protection Program Act.  This has not been passed into law yet. This Bill addresses the following:

  1. Expanded Non-Payroll Forgivable Expenses
  2. Simplified Forgiveness Application for Loans under $150,000
  3. Second Draw from PPP Loans

Expanded Non-Payroll Expenses

Eligible non-payroll expenses were rent, utilities, and interest.  The proposed Bill would add four new items to be included as allowable forgivable non-payroll expenses:

Covered Operations Expenditures

For any software that helps facilitates businesses:

  • Operations
  • Product
  • Service Delivery
  • Processing Payment
  • Tracking Payroll Expenses
  • Human Resources
  • Sales & Billing functions
  • Accounting
  • Inventory & Supply Tracking
  • Records and Expenses

Property Damage Costs

Costs related to property damage, vandalism or looting due to public disturbances that occurred during 2020 that are not covered by insurance or other compensation.

Covered Supplier Costs

Expenses to a supplier with a contract for goods that was in effect prior to February 15, 2020 that are essential to the business’ current operations.

Covered Worker Protection

Operating expense or Capital Improvement that was required to comply with requirements established for guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration during March 1, – December 31, 2020 to maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.  This includes the purchase, maintenance, or renovation for:

  • Drive-through window
  • Air pressure ventilation or filtration system
  • Physical barrier (i.e. sneeze guard)
  • Health screening capability
  • Personal protective equipment

Loans $150,000 or Under

Automatic PPP forgiveness granted for any PPP loans of $150,000 and under.  Borrower will be required to sign and submit an attestation that they made a good faith effort to comply with the requirements for the PPP loans.  Records must be retained for three years following the submission of the forgiveness attestation.  The Administrator holds the right to review and audit these loans for any fraud, ineligibility, or other material noncompliance.

Second Draw Paycheck Protection Program Loans

The Bill will provide an additional $190 billion in funding to the PPP program for first and second-time borrowers.  In order to be eligible to receive a Paycheck Protection Program second draw loan, you must;

  1. Employ 300 or fewer employees
  2. Not be a publicly traded company
  3. Demonstrate at least a 50 percent reduction in gross revenues*
  4. Both PPP loans must not aggregate more than $10 million and the second loan cannot exceed $2 million.

Eligible loan forgiveness for the second draw PPP would be the same requirements as the first round for eligible expenses that occur before December 31, 2020.

*See below for how the revenue period is to be calculated depending on the business’ situation.

  • Default Revenue Period: Revenues during the 1st or 2nd calendar quarter of 2020 are less than 50% of the revenues during the same calendar quarter in 2019.
  • New Business after July 1, 2019: Revenues during the 1st or 2nd calendar quarter of 2020 are less than 50% of the revenues during the 3rd or 4th quarters of 2019.
  • New Business after October 1, 2019: Revenues during the 1st or 2nd calendar quarter of 2020 are less than 50% of the revenues during the 4th quarter of 2019.
  • New Business after January 1, 2020: Revenues during the 2nd calendar quarter of 2020 are less than 50% of the revenues during the 1st quarter of 2020. New businesses after February 15th are not eligible.

The Continuing Small Business Recovery and Paycheck Protection Program Act has only been introduced in Congress and has not been voted on yet.  Also note that this Bill had no mention to the IRS Notice 2020-32 on the deductibility of forgiven expenses, resulting in an unfavorable taxable burden.  We are hopeful Congress address this issue and reverse the IRS position to allow taxpayers to deduct the covered expenses.

Check back for updates on this proposed Bill.