PPP Extended – Funds Available for Businesses

A bill to move the Paycheck Protection Program (PPP) application deadline from March 31 to May 31 won approval in the U.S. Senate last Thursday and has been signed into law by President Biden Tuesday, March 30.

The legislation extends the filing deadline for PPP applications by 60 days and provides an additional 30 days for the SBA to finish processing applications received by May 31. It does not provide any additional funding for the current round of the PPP.

What does this mean for you?

The PPP is essentially a tax-free grant from the federal government.  It is available If you are self-employed or operate a business or non-profit.  If you have not yet applied for a PPP loan for your business, or are eligible for a second round PPP loan, and wish to take advantage of these opportunities, we recommend getting in touch with your banker and applying as soon as possible.

Note that some banks temporarily closed their application portals since the program was originally set to expire on 3/31. Now that the extension has been signed into law, banks that shut down are expected to reopen their portals in short order. Still get in touch with your bank ASAP so you can work on the application and apply once they are back up accepting applications (if your bank had shut down).

Have questions? Need help filling out the application? Our staff is here to help! Reply to this email or call our office at (208) 265-5959.

What is the Paycheck Protection Program (PPP)?

The Paycheck Protection Program (PPP) is a forgivable loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Funds can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. To learn more about the program visit the Small Business Administration’s website.

The SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. A few other items of note:

  • No collateral or personal guarantees are required.
  • Neither the government nor lenders will charge small businesses any fees.
  • Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (between 8 and 24 weeks).
  • PPP loans have an interest rate of 1%.
  • Loans issued after June 5, 2020, have a maturity of five years.

First Draw PPP loans: If you have not received a PPP loan before, First Draw PPP loans are available to you.

Second Draw PPP loans: If you have previously received a PPP loan, certain businesses are eligible for a Second Draw PPP loan.  The second draw PPP is available to businesses that had a substantial drop in revenue.  The mechanics of that decline are complex. If you think you might be eligible, please call.

PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs from the year prior to the loan, or the calendar year, up to a $2 million maximum. Hotels and restaurants (NAICS codes starting with 72) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.  Self-employed people are eligible for a larger PPP as well.

Tax deductibility for PPP expenses

PPP loan funds received are not taxable to the business, and business expenses paid with forgiven PPP loans are tax-deductible. This provision applies to loans under both the original PPP and subsequent PPP loans.

Other COVID-19 relief program updates:

  • The Shuttered Venue Operators (SVOG) Grant Program is going to open on April 8, 2021. The SBA has issued preliminary guidance that is available on its site as of March 24, 2021. Learn more here.
  • The Restaurant Revitalization Fund (RRF) is also targeted to open in early April. The RRF will offer $28.6 billion in grants to hard-hit restaurants and bars, with restaurants able to apply for grants based on lost revenue. Additionally, $5 billion of that total will be set aside expressly for businesses with 2019 gross receipts of less than $500,000. Keep an eye out for this program to open very soon.