PPP2 For Nonprofits Charities & Ministries overviews the key differences between the Consolidated Appropriations Act, 2021 and the first stimulus package approved this past March by Congress ($2 trillion CARES Act.)
Please note that guidance and regulations related to this second round of PPP have NOT yet been issued. The SBA is required to
provide these regulations within 10 days of the enactment of the Act. INSIDE CHARITY will continue to provide relevant updates as such guidance and regulations become available.
This new $900 billion COVID relief package includes $284 billion in aid for nonprofits and small businesses through a second round of Paycheck Protection Program (PPP) forgivable loans. PPP2 contains several important differences from the first round of PPP. PPP2 loans will be available to first-time qualified borrowers as well as nonprofits that previously received a PPP loan.
Second-Time Borrower Eligibility: Previous PPP recipients will be eligible for another loan of up to $2 million provided they (NOTE: The eligibility requirements stated below do not apply to first-time borrowers.):
Maximum Loan: PPP2 borrowers may calculate their maximum loan about by multiplying the borrower’s average monthly payroll in (i) the trailing 12-month period as of the date the loan is made, or (ii) calendar year 2019, by 2.5x. The maximum loan for second-time borrowers is $2 million while the cap for first-time borrowers remains at $10 million. Like the first round of PPP loans, seasonal employers will calculate their maximum loan amounts differently.
Flexibility added to “Covered Period”: While the CARES Act originally provided for an 8-week covered period (time in which borrower must use loan proceeds to qualify for forgiveness) beginning on the day loan proceeds were disbursed, subsequent amendments allowed borrowers to alternatively elect for a 24-week covered period. PPP2 borrowers will now be permitted to choose the length of their covered period provided it is not less than 8 weeks and no more than 24 weeks.
Expansion of Covered Expenses: Previously, PPP proceeds were to be used for payroll, rent, covered mortgage interests and utilities in order to qualify for 100% forgiveness. Pursuant to the act, PPP proceeds may also be allocated to the following expenses:
EIDL Impact on Forgiveness: The Act provides that the proceeds of any EIDL Advances provided to PPP borrowers will no longer need to be reduced from the amount eligible for forgiveness.
Simplified Forgiveness Applications: The Act created a simplified forgiveness application process for loans of $150,000 or less. Such borrowers will be eligible for forgiveness if they sign and submit to the lender a one-page certification including: a description of the number of employees the borrower was able to retain because of the loan; the estimated total amount of the loan spent on payroll costs; and the total loan amount.
501(c)(6) organizations are now eligible:
Business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder. To be eligible, such organizations must meet the following criteria:
In addition to first-time eligibility for Section 501(c)(6) not-for-profit organizations, destination marketing organizations and housing cooperatives have also been made eligible.
Please note that guidance and regulations related to this second round of PPP have not yet been issued. The SBA is required to provide these regulations within 10 days of the enactment of the Act. We will continue to provide relevant updates as such guidance and regulations become available.
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PPP2 For Nonprofits Charities & Ministries – Key Differences was first posted at INSIDE CHARITY