Second round of PPP loans included in recent coronavirus relief package

The $900 billion coronavirus relief package passed by Congress and recently signed by President Donald Trump provides another $284 billion to the Paycheck Protection Program (PPP) allowing for additional relief to small businesses ravaged by the pandemic.

Details within the package also change the loan forgiveness process and the tax treatment of PPP loans.

The first wave of PPP loans ran out on Aug. 8. While the Small Business Administration (SBA) did not immediately announce when new loans will become available, the program runs until March 31 or until the money is gone.

More than 3,000 people and businesses headquartered in Ocala received PPP loans during the first round, according to Department of Treasury records.

While the exact amount of loans is not available, a minimum estimate is more than $232.7 million.

The U.S. Chamber of Commerce’s website reports the new loans will be available for “small businesses, nonprofit organizations, veteran organizations, tribal businesses, certain self-employed individuals, sole proprietors, independent contractors and small agricultural cooperatives” who qualify. Employers can have no more than 300 employees.

Qualifying for the loans is different this time around and is open only to those whose gross sales dropped 25% or more during a quarter before and after the pandemic.

“For businesses established before 2019, the SBA will compare your gross receipts from any quarter in 2019 to the corresponding quarter in 2020 to quantify the drop. If your business was established after 2019, reach out to your banker or accountant for assistance as that scenario becomes a little more complex,” said Adam Woods, a senior vice president with F&M Bank and Trust in Ocala.

The amount of the second round of PPP loans will be similar to the first, and based on 2.5 months of payroll costs, said Jayme Zublick, a CPA at Collier, Jernigan, Eastman & Zublick, P.A.

However, hotels and restaurants may receive up to 3.5 months of payroll costs.

Loan recipients will need to spend 60% of the total loan for payroll to have it forgiven, according to the U.S. Chamber.

The costs and expenditures that can be forgiven under the loan must be incurred or paid “between the date of the origination of the loan and ending on a date of your choosing that is between 8 and 24 weeks after origination” and be used “for: (a) payroll costs, (b) qualifying mortgage interest or rent obligations, (c) covered utility costs, (d) covered operations costs, (e) covered property damage, (f) covered supplier costs, and (g) covered worker protection expenditures.”

Zublick said the application process for full loan forgiveness for those businesses with loans of $150,000 or less is as simple as “submitting a certification to their lender that includes a description of the number of employees they were able to retain with the loan proceeds, the amount spent on payroll costs and the total loan amount.”

The new law also allows those businesses that paid for regular business expenses with PPP loans to deduct those expenses for tax purposes.

Besides the changes to PPP loans, Congress has also made changes to other programs – including Economic Injury Disaster Loans (EIDL Program), the Employee Retention Tax Credit, a Venue Grant program, and SBA loan programs.

“We are still researching the additional information regarding the dedicated funds set aside for shuttered live venues, independent movie theaters and cultural institutions, businesses in low-income and minority communities,” Zublick said.