On December 21, 2020, the United States Congress passed a $2.3 trillion federal spending package, which, among other things, includes $284 billion for another round of small business aid through the Paycheck Protection Program (PPP). The bill will become law once signed by the President. A business that has already received a PPP loan may be eligible to get a second loan, provided that certain conditions are met, for example, it must demonstrate it has 300 or fewer employees and has experienced a 25% reduction in gross receipts during a quarter in 2020 compared with the same quarter in 2019. First-time PPP loan applicants may have up to 500 employees, and are not required to prove evidence of revenue loss. The loan amounts will be based on a borrower’s payroll costs and be capped at $2 million. The bill also clarifies that PPP loan borrowers can claim tax deductions for business expenses associated with these PPP loans.
The PPP program provides distressed small businesses with forgivable loans to keep their workforce employed during the COVID-19 pandemic. The first round of PPP program was introduced under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) on March 27, 2020.