New PPP Funds Limited to Those That Lost 25% or More of Revenue If They Received First-Round Funds
The $900 billion economic relief bill that just passed both the Senate and the House of Representatives includes a new round of funding for the Paycheck Protection Program (PPP), providing an additional $284 billion for the program.
The new round of funding for the PPP provides an additional $284 billion for the program. Companies that already received a PPP loan during the first round of funding must have have 300 or fewer employees, have used or will use the full amount of their first PPP loan, and have lost 25% of their revenue in the first three quarters of 2020 to be eligible for this second round. (These requirements do not apply to first-time PPP borrowers.) As in the prior rules, companies must show that at least 60% of the funds are used to cover payroll. The new law provides a simplified forgiveness program for loans under $150,000.
Of broader interest, the bill specifies that expenses covered by the PPP are deductible. There had been some question if that would be the case.
NCEO data showed that most ESOP companies did apply for the loan and almost all who applied received one. That won’t happen again, as these same data indicate that the ESOP community has fared better in this crisis than other companies. For some ESOP companies, however, the bill can be an important lifeline.