On December 27, 2020 the $2.3 trillion Consolidated Appropriations Act of 2021 was signed into law, with $1.4 trillion of the total going towards funding the government through September 2021 and $900 billion for Covid-19 relief. 

Notably, $284 billion has been designated for funding forgivable loans through the revival of the Paycheck Protection Program (PPP) under the Economic Aid To Hard-Hit Small Businesses, Nonprofits, And Venues Act. The initial round of PPP funding included in March 2020’s CARES ACT was a blessing for businesses experiencing pandemic-induced revenue setbacks in 2020. The third round of PPP (PPPr3) includes improvements that make the program even more targeted and favorable to small businesses with the hope and expectation that every deserving business is able to benefit from the PPP’s round 3.

The SBA has until January 6, 2021 to issue specific program guidelines and guidance for implementation, but Upwise has had its ears to the ground to ensure we can duplicate the success we had facilitating PPP funds for our clients in the first and second round. Through research and experience, our process is enhanced, streamlined, and expedited so we can hit the ground running once funds are fully made available. Here’s what business owners should know about the latest iteration of PPP:

Loan Size

The amount disbursed to businesses in the latest round of PPP will be 3.5x the average monthly payroll for businesses in the hospitality industry and 2.5x the average monthly payroll for all other qualifying businesses. The difference in loan size reflects the emphasis put on helping restaurants and hotels that have been hit especially hard by the pandemic and employ many workers who are struggling to make ends meet. The maximum loan amount is $2 million, down from $10 million in round one and round 2 of PPP, further demonstrating the effort to target relief to small businesses.

Eligibility – “PPP Second Draw” or 3^rd Round of PPP Funding “PPPr3”

A focus on helping small businesses can be seen in changes to eligibility requirements in PPPr3, as well. Publicly traded companies are no longer eligible and the maximum number of employees for qualifying businesses has been reduced from 500 to 300 for companies seeking a second draw PPP loan. First-time recipients remain capped at 500 employees.

Businesses receiving a “Second Draw” PPP loan must show a 25% reduction in revenue in any quarter of 2020 relative to the same quarter in 2019. They must also have used, or will soon use, the proceeds from their “First Draw” PPP loan.

All businesses must have been in operation prior to February 15, 2020 to qualify for a first- or second-draw PPP loan.

PPP Forgiveness

For PPP loans distributed in round 3 to be forgiven, 60% of proceeds must be used towards payroll. As in round 1 and 2, rent and utilities are also eligible expenses. Additional eligible expenses have been included in this iteration of PPP:

• Certain operation expenditures including business software and cloud computing products and services; the tracking and processing of payroll expenses; costs related to human resources, sales, and billing; or the tracking and accounting of records, expenses, supplies, and inventory
• Property damage related to public disturbances not otherwise covered by insurance or any other form of compensation
• Expenses related to protecting workers such as PPE purchases or modifications/renovations made to comply with federal, state, or local guidance issued in relation to the pandemic.
• Costs owed to suppliers for essential goods purchased prior to receiving your latest PPP loan or perishable goods purchased before or during the “covered period” of the loan.
  • The “PPP covered period” is determined by the borrower and must be between 8 and 24 weeks of receiving the PPP loan.

There is also a new, simplified process for the forgiveness of loans $150,000 and under. The SBA currently has until January 20, 2021 to provide a one-page certification form to be completed by the borrower at any time before the loan matures. It is recommended to complete the form within 10 months after the covered period of your loan ends because that is when monthly payments begin on any PPP funds that are not forgiven.

Deductibility

This round of PPP contains an adjustment to the program that is extremely advantageous for business owners: expenses paid with PPP funds are tax-deductible. This is a reversal from initial guidance that disallowed the deductibility of expenses covered by a forgiven loan. Advocacy from the business community now allows what critics have called “double-dipping” and makes the PPP program much more beneficial for businesses when they determine their 2020 tax bill.

The Process

All information and forgiveness forms will be available directly on the SBA website. There, business owners can look up all legislative text and regulations, so they can obtain their forgivable PPP loan. Here at Upwise Capital, we are an SBA agent facilitating our expedited PPP application through our SBA bank partners.  We know how busy you are, especially during these trying times, and we are here to help secure your loan.  You are not required to switch your banking in order to receive a PPP loan.  Please feel free to reach out to [email protected] or click here to fill out our PPP intake form.  Upwise will begin processing PPP loans later this week and we want to ensure you are first in line to take advantage of our expedited application process.