PPP2 for Nonprofits is Inside Charity’s UPDATED REPORT on the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. Thankfully, PPP2 funding has not yet run out, and the great majority of applications are getting approved in a timely manner so chances are high that your nonprofit will get approved quickly if you apply with a lender soon. The Small Business Administration has reported that it has authorized $5 Billion in new PPP loans since the program reopened in January 2021.
Forgiveness: Expands forgivable expenses to include the costs of PPE, workplace modifications, short-form approval of loans of $150,000 or less.
Second Draw Loans: Charitable nonprofits may qualify for an additional PPP loan (Second Draw) of up to $2 million if they a) employ 300 or fewer employees, and b) experience a decline in gross receipts of 25% in one of the four quarters in 2020 compared to the same quarter in 2019. NOTE: Nonprofit “gross receipt” defined using the tax-law definition and not the arbitrary definition seen in earlier drafts. PPP2 also makes the forgivable loans available to Sec. 501(c)(6) business leagues, such as chambers of commerce, visitors’ bureaus, etc., and “destination marketing organizations” (as defined in the Act), provided they have 300 or fewer employees and do not receive more than 15% of receipts from lobbying. The lobbying activities must comprise no more than 15% of the organization’s total activities and have cost no more than $1 million during the most recent tax year that ended before Feb. 15, 2020.
Employee Retention Tax Credit: Extends for six months (to 7/1/2021) and expands usefulness, particularly to nonprofits excluded from Paycheck Protection Program (PPP) participation, by reducing the required decline in gross receipts from 50% to 20%, increasing the refundable payroll tax credit from 50% to 70%, and covering up to two quarters for a total benefit of $14,000 per covered employee. It also provides that employers who receive PPP loans may still qualify for the ERTC concerning wages that are not paid for with forgiven PPP proceeds.
Paid Sick Leave Tax Credit: Extends through 3/31/2021 the refundable payroll tax credits for paid sick and family leave that were established in the Families First Coronavirus Response Act. The bill also extends through 2025 the 12.5% to 25% income tax credit for paid family and medical leave initially enacted in the 2017 tax law.
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:
The new COVID-19 relief bill also:
Creates a simplified forgiveness application process for loans of $150,000 or less
Specifically, a borrower can receive forgiveness if a borrower signs and submits to the lender a certification that:
Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.
Save Our Stages
Provides $15 billion dedicated to aiding performance venues, independent movie theaters, and cultural institutions.
Direct Payments of $600 for individuals making less than $75,000 & $1,200 for married couples making less than $150,000, plus $600 per dependent.
Coronavirus Relief Fund: Extended to 12/31/2021
Relief for Reimbursing Employers: Extends until 3/14/2021 the 50% federal coverage of the costs of self-insured “reimbursable” employers.
Charitable Giving Incentives: Reestablishes the $300 above-the-line deduction for 2021 and applies a $600 deduction for couples filing jointly in 2021; imposes a penalty for overstating contributions. The bill also extends the increased limits on deductible charitable contributions for individuals who itemize and for corporations for one year.
Please note that this article is provided for informational purposes only. We are not lawyers and do not pretend to be. This article represents our understanding of the situation at the time it was written. Please consult your legal and accounting experts, as well as government websites, and rely on them as the final authority.
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