December 22, 2020 – The long awaited COVID-19 Stimulus Package could be signed into law within days. Included in the Package is $284 billion for a second round of the Paycheck Protection Program (PPP). Many are referring to this as “PPP2.”
Firstrust is still waiting to learn more from the U.S. Small Business Administration (SBA) and Treasury Department. However, we can provide you with information that we do know*.
PPP2 loans will be available to first-time qualified borrowers and to businesses that previously received a PPP loan, as long as they meet certain needs-based criteria:
PPP2 will also permit first-time borrowers from the following groups:
The bill allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.
PPP2 loan amount is capped at $2million compared to the PPP1 loan maximum which was $10 million.
As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. PPP2 also makes the following potentially forgivable:
To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters PPP1 had when it stopped accepting applications in August.
PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount is $2 million. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.
The new COVID-19 relief bill also:
We will continue to provide you with updates as we learn more. If you are interested in applying for a PPP2 loan, please contact your Relationship Manager or Branch Manager.
*Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. Although we will be monitoring and updating this as new information becomes available. If you need financial advice today, please reach out to your CPA or Attorney.
For compliance notes: