{"id":168,"date":"2021-01-12T07:27:19","date_gmt":"2021-01-12T07:27:19","guid":{"rendered":"https:\/\/www.thinkastute.com\/blog\/?p=168"},"modified":"2023-11-26T07:29:28","modified_gmt":"2023-11-26T07:29:28","slug":"highlights-from-the-2nd-round-of-the-paycheck-protection-program-ppp","status":"publish","type":"post","link":"https:\/\/www.thinkastute.com\/blog\/highlights-from-the-2nd-round-of-the-paycheck-protection-program-ppp\/","title":{"rendered":"Highlights from the 2nd Round of the Paycheck Protection Program (PPP)"},"content":{"rendered":"

Welcome back, PPP. This sequel has been greatly anticipated, as approximately 90% of borrowers say they\u2019ve exhausted their first loan. This lifeline may help many small business owners stay afloat until the economy bounces back.<\/p>\n

After several months of hand-wringing deliberation and debates on Capitol Hill, the U.S. Congress finally reached an agreement. On December 20, 2020, they agreed to a $900 billion COVID relief package. Of that massive amount, $284 billion has been allocated as PPP for small businesses. PPP was a major initiative of the CARES Act created in March.<\/div>\n
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This newly minted package provides additional funding for those businesses that did OR did not receive PPP money in the first round. Further, if businesses can demonstrate a loss of 25% or greater in 2020 when compared to the same quarter in 2019, they will have another opportunity to obtain a U.S. small business loan.<\/div>\n
For months, businesses that snagged PPP loans have been frantically worried about tax consequences. This latest package dispels the darkness; business expenses that were paid with the forgivable loan do in fact qualify as tax deductions<\/strong>.<\/div>\n
This was not as easy decision. Initially, the IRS had issued an emphatic \u2018no!\u2019 But the U.S. Congress has taken a different stance; their position is that the whole point of the PPP was to provide funds to pay wages and cover certain expenses. Thus, businesses may claim normal tax deductions for business expenses that were paid with PPP money. [Small Business Expense Protection Act, S.3612 – 116th Congress (2019-2020)].<\/div>\n
The latest COVID relief law states \u201cno deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by<\/em> [the loan forgiveness provision that says forgiven PPP loans will not count as income].\u201d<\/div>\n
In a nutshell: if a PPP loan is completely forgiven, it will not be considered as income and does not need to be repaid.<\/div>\n
How the new relief package can benefit small businesses<\/strong><\/div>\n
The second round of PPP loans will be disbursed from December 28, 2020 to March 31, 2021. For most industries, the loan amounts are limited to $2 million. In case you are wondering about the scope of the original PPP program, we have the details; in July, the Treasury stated that 650,000 small businesses \u2013 and nonprofits \u2013 had received a U.S. loan.<\/div>\n
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After learning they may claim business expenses as deductions, these businesses are no doubt breathing a sigh of relief. Below is a snapshot of some provisions included in the second round:<\/div>\n
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