As always, we’re keeping you abreast of the all the updates coming out of Washington regarding COVID-19 relief and PPP. After much anticipation, the Senate has released its latest effort on these efforts. A summary of the proposal is below. While this is nowhere near a finalized piece of legislature, it’s a jumping off point to start negotiations. As expected, there are no changes to Payroll taxes (FICA). There is an expansion of the employee tax credit, but these can only reduce tax payments to zero, they cannot go negative.
We will keep you posted as things progress.
PPP Second Draw Loans:
- Provides $190 billion of committed and appropriated funds to support PPP and PPP Second Draw Loans must:
- have no more than 300 employees, and
- demonstrate at least a 50 percent reduction in gross revenues.
- $25 billion is set-aside for entities with 10 or fewer employees and a $10 billion set aside for loans made by community lenders.
- The maximum loan size would equal 2.5 times average total monthly payroll costs, up to $2 million. Businesses that received a PPP loan may not receive another PPP loan that aggregates to more than $10 million.
- The 60/40 cost allocation for payroll and non-payroll costs to receive full PPP forgiveness continues to apply.
- Expands forgivable expenses to include covered supplier costs, covered worker protection expenditures, and covered operations expenditures.
- Allows borrowers to select a preferred 8-week period through 2020 to use the forgivable loan proceeds.
- Simplifies the forgiveness application process for smaller loans.
- Expands PPP eligibility to include certain 501(c)(6) organizations, including Chambers of Commerce and Destination Marketing Organizations with 300 or fewer employees, excluding lobbying expenses.
- Establishes a specific PPP loan calculation for farmers and ranchers and provides Farm Credit System Institutions with greater certainty and equity in participating in PPP lending.