As 2020 draws to a close, there are increasing signals thata new Paycheck Protection Program (PPP) could be in the works. But there aresome caveats to consider.

The $900 billion stimulus bill approved by Congress lastweek and signed by the President on Sunday provides for a new round of PPPpayments to both those who have not received PPP funds in the past and thosewho previously secured PPP funding.  

The new PPP program allocates $284 billion for initial and“second draw” PPP loans. Initial loans are provided to those companies thathaven’t yet received PPP funding. Second draw loans are given to those companies that previously received PPP funding.

However, the new program is notably different than thefirst. Here are a few considerations:

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     - To qualify for a PPP loan, companies must provethat they have experienced a 25% drop in gross receipts in any quarter in 2020, compared to the same period in 2019. So,      for instance, if a company’s gross receipts fell by 25% year-over-year in the third quarter, it would qualify.Companies that have generated stable or even increasing      year- over-year sales in2020 would not qualify for a PPP loan.

     - Only companies that were in operation beforeFebruary 15, 2020 may apply and qualify for a PPP loan.

     - In order to qualify for a second draw PPP loan, companies must have 300 or fewer employees and must use all of their initialPPP funds before applying for the second       draw. They must also satisfy the requirements outlined above.

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In addition to the changes to qualifications, the bill provides for a simpler forgiveness process for those who borrowed less than$150,000. PPP loans can also be used for an expanded list of expenses, including operating costs, property damage, and supplier costs.

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As always, Perlson, LLP will keep a close eye on the developments of the bill and the PPP program and will keep you informed on any changes or modifications.

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