New PPP Guide issued by SBA, Treasury

U.S. The Small Business Administration (SBA) and the Treasury issued guidelines Wednesday night for the restructured Paycheck Protection Program (PPP).

The guidelines include two Interim Final Rules (IFRs).

  • 82-page IFR “Temporary changes to the business loan program; The Paycheck Protection Program, as amended, “collects PPP rules for first-time borrowers, and outlines changes to hard-hit small businesses, for-profit and Venues Act, PL 116-260 through financial aid.
  • 42-page IFR “Temporary changes to the business loan program; The Paycheck Protection Program Second Draw Loan ”provides guidance to businesses that have previously obtained PPP loans for new PPP loans.

In addition, the SBA issued a three-page “Guide to Accessing Capital for Minority, Discretionary, Pte and Women-Owned Business Concerns.” In that guidance S.B.A. Includes at least the first two days of the PPP application window to include a commitment to open up applications to community financial institutions that serve minority- and women-owned businesses. SBA has not set a date for the PPP to resume, but the program is official from March 31.

Eric Asirison, CEO of, a business subsidiary of AICPA, said in an AICPA town hall on Wednesday afternoon that new forms for the PPP are likely to be released this week and SBA may start receiving applications as early as Monday.

Congress revived the PPP as part of the 900 900 billion Covid-19 relief bill signed into law on December 27. The iv was forgiven 5 525 billion in the five months before the original PPP stopped accepting applications in months gust. The Financial Aid Act reintroduced the PPP with the same parameters as the first program but also many important differences from the original PPP. The new PPP has been given the power to operate till March 311. New PPP application forms have not been released yet, but are expected in the next few days. SBA has not yet announced when it will start accepting new PPP applications.

Second draw PPP loan

The biggest change in the new PPP is that Congress provided funding to businesses that had previously received PPP loans. Orrow borrowers are eligible for a second draw PPP loan of up to 2 million, if they have:

  • 300 or fewer employees.
  • The full amount of their first PPP loan is used or will be used on or before the expected date of the second PPP loan disbursed to the borrower. The IFR also clarifies that the borrower must have spent the full amount of the first PPP loan on eligible expenses.
  • All or parts of 2020 have experienced a 25% or more revenue decline compared to all or part of 2019. This is calculated by comparing the total receipts in any 2020 quarter with the quarter applicable in 2019, or, in a provision added to the IFR, a borrower who was employed in the four quarters of 2019 may submit copies of his annual tax forms to the 2019 quarter. Compared to 2020, annual receipts are down 25% or more.

The Financial Aid Act does not provide a general definition of gross income to determine a borrower’s income reduction, so the new guidelines are consistent with the definition of receipt in section 121.104 of the 13 CFR of the SBA Size Rules. Specifically, IFR defines gross income to include all income in any form (according to the accounting method of income), from any source, received or accrued, by interest, dividend, rent, royalty, fee or any sale, products or services. Reduced by commissions, compensation and allowances. Forgive First Draw PPP Loan 2020 is not included in the total income.

First draw PPP loan

The Financial Assistance Act is a return. The first draw PPP loans have been made available to the borrowers working on 15, 2020, and one of the following groups:

  • Businesses with 500 or fewer employees that are eligible for other SBA 7 (a) loans.
  • Sole proprietors, independent contractors and eligible self-employed individuals.
  • Not for profit, including churches.
  • Accommodation and food services operations with less than 500 employees per physical location (starting with Code 72 of the North American Industry Classification System (NAICS)).
  • Sec. 101 (c) ()) Business leagues, such as chambers of commerce, visitor bureaus, etc., and “destination marketing organizations” with or00 employees and no more than 15% receipt from lobbying. Lobbying activities should not exceed 15% of the organization’s total activities and no more than 1 1 million was spent during the most recent tax year, which ended before February 15.2020. Sports league is not eligible.
  • News organizations that are owned or controlled by a majority by NAICS Code 511110 or 5151 Business or are not for-profit public broadcasting organizations with trade or business under NAICS Code 511110 or 5151. The size limit of this class is not more than 500 employees per location.

In substitution for the original PPP, publicly controlled trading companies and businesses, directly or indirectly, the president, vice president, heads of executive departments and members of Congress (or their spouses, not determined by applicable common law). For PPP loans.

PPP applicants must submit sufficient documents to establish eligibility and indicate a qualifying payroll amount, which may include, as applicable, payroll records; Payroll tax filings; Form 1099-MISC, Casual income; Form 1040, Schedule C, Business advantage or disadvantage, Or schedule f, Profit or loss from farming; Income and expenses from sole proprietorship; Or bank records.

PPP loan maximum amount

Generally, first-time PPP borrowers can receive a loan or loan amount up to 2.5 times their average monthly payroll costs (not counting employees who make more than ,000 100,000 a year) in the year before the lender year. PPP borrowers with NAICS codes starting with PPP૨ (hotels and rest restaurants rent) can receive up to 3.5 times their average monthly payroll expenses.

The maximum for the first draw PPP loan is 10 million, which is the same as the original PPP. Applicants must provide Form 941, Employer quarterly federal tax return, (Or ​​other forms with similar information) and state or quarterly wage unemployment insurance tax report forms from each quarter in 2019 or 2020 (used to calculate loan amounts), or equivalent payroll processor records, with any retirement and health proof. Insurance contributions.

Eligible costs

If the funds are used at eligible costs, PPP borrowers can forgive their first and second draw loans. As with the first round of PPP, the revised PPP includes eligible payroll waiver, payroll, rent, covered mortgage interest and utilities. In addition, the following costs are now eligible:

  • COVID-19 costs changes to worker safety and convenience, including personal protective equipment, to comply with federal health and safety guidelines.
  • Covering property damage not covered by insurance or other compensation in 2020 and property damage caused by vandalism or robbery.
  • Expenses for suppliers that are required at the time of purchase of the recipient’s current operations.
  • Operating operating costs, which refers to the payment for any commercial software or cloud computing service that facilitates business operations; Product or service delivery; Tracking of processing, payment or parole costs; Human resources; Sales and billing functions; Or accounting or tracking of supplies, inventory, records and expenses.

To be eligible for full loan waiver, PPP orrow borrowers should not spend less than 60 per cent of the funds on payroll during the period covered between eight or 24 weeks.

Easy forgiveness

Borrowers who have a PPP of 000 1,000,000 or less. When the loan is received, they will be forgiven the loan, the estimated total amount of the loan spent on parole costs and the total amount of the loan. SBAA has yet to create a simple application form but must do so by January 20th. No additional material will be required in the form unless it is necessary to submit the revenue loss requirements or to satisfy the relevant legal or regulatory requirements. BA borrowers are required to maintain employment related records for four years and other records for three years, as SBA may review and audit these loans to investigate fraud.

Minority, underworld, pte and women-owned businesses

The Financial Aid Act provides group support for new and small borrowers, for lenders in low- and middle-income communities, and for community and small lenders. The set includes:

  • 15 15 billion in first and second draw PPP loans for financing by community financial institutions;
  • Illion 15 billion in first and second draw PPP loans for lending by insured depository institutions, credit unions and farm credit system institutions with assets of less than illion 10 billion;
  • New first draw for PPP borrowing for 35 billion; And
  • The PPP loans for the first draw and the second draw are 15 15 billion and 25 25 billion, respectively, for borrowers with or without a maximum of 10 employees or for loans of less than 250 250,000 to borrowers in low- and middle-income neighborhoods. The SBA has determined that at least 25% of each will go to each group: loans to orrowers with a maximum of 10 employees and loans of less than 250 250,000 to orrow holders in low- or middle-income neighborhoods.

SBAA announced in its three-page guide that it would take a number of steps to ensure increased use of PPPs for minority, underworld, pte and women-owned business concerns. Most notably, SBAA said it would only accept PPP loan applications from community financial institutions for at least the first two days when the PPP loan portal reopens. In addition, SBA said it would:

  • Inquiries of direct lender match takers for small lenders that can traditionally help underwritten communities;
  • Match small businesses through certified development companies (CDCs), farm credit system lenders, microloan intermediaries and lender matches with traditional small asset size lenders;
  • Continue setting aside dedicated hours to process and assist small PPP lenders on their PPP loans;
  • Continue to strongly encourage community development financial institutions and minority-, women-, pte- and military-owned lenders to apply to become PPP lenders. The SBA said it had submitted the application to the PPP. The lender will consider thorough and urgent consideration of compliance with the program guidelines, including in cases where the payer does not meet all the requirements listed on the updated SBA Form 3507;
  • Continue to work with the Board of Governors of the Federal Reserve System on the PPP Liquidity Facility, so that PPP lenders, including non-bank lenders, can be given loans to the Federal Reserve as collateral for the Federal Reserve’s assumption, to increase lender liquidity. The lender is empowered. Increase their lending capacity;
  • Promote awareness of these policies and procedures by guiding lenders before the formal opening of traditional media methods, SBA social media accounts and SBA loan systems;
  • Continue working with federal partners. The Department of Agriculture, including the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of Currency, the Farm Credit Administration, and the National Credit Union Administration, announced to share guidance with PPP lenders, orrow lenders, and broader.

AICPA experts hold the latest discussions on PPP and other small business assistance programs during bilateral virtual townhalls. Webcasts, which offer CPE credit, are free for AICPA members. go there AICPA Town Hall Series Webpage for more information and to register.

This AICPA’s Paycheck Protection Program Resources page There are tools and equipment produced by AICPA to help eliminate the economic impact of coronavirus.

For more news and coronavirus reports and how CPA can handle epidemic challenges, visit JofaNo. Coronavirus Resources page Or Subscribe to our email alerts To break the PPP news.

Jeff Drew ([email protected]) Is a Jofa Senior editor.