The SBA released final rules for the program on Jan. 7. Here's what you need to know:
- For the first two days after the program reopens, only applications from community financial institutions will be accepted. These organizations typically serve women, minority and underserved entrepreneurs.
- Applications for all business owners close on March 31.
- Businesses will calculate their maximum loan amount using payroll costs for a one-year period, using a date of their choosing that can be in either 2019 or 2020.
- The maximum loan amount has been substantially reduced from $10 million to $2 million.
- You can receive a second PPP loan if you have fewer than 300 employees and lost 25% of your gross receipts over one quarter in 2020 compared to the same quarter in the 2019. If you are taking out a loan under $150,000, you do not to provide documentation of this loss until you apply for forgiveness.
- You cannot apply for a second PPP loan if your application for the first round of loans is still unresolved.
- If this is your first time receiving a PPP loan, the initial requirements of having up to 500 employees and not demonstrating a loss in revenue apply, according to the Washington Post.
- In order to have the loan forgiven, businesses must spend 60% of the loan amount on payroll. The remaining 40% can still be spent on rent, mortgage payments, utility costs and other expenditures like purchasing personal protection equipment.
- Expenses paid for with the PPP loan are tax deductible. We're still waiting for additional details on the tax implications, so it’s unclear if there are exceptions or any limitations on the deductions.
- Just as before, business owners will apply for the loans through their bank or community financial institution.