PPP2 Could Be a Reality This Week December 15, 2020Background Momentum for a $908 billion economic stimulus package has been building in Congress over the past several weeks and lawmakers appear to be eager to strike a deal before adjourning for the holidays. The two major obstacles for Republicans and Democrats – aid to State/Local governments and Covid liability protection for businesses – could be spun off into a separate $160 billion bill, leaving $748 billion in assistance largely agreed upon by the two parties.What’s Included In addition to money for extended unemployment benefits, vaccine distribution, and transportation (among other things), the package designates $288 billion for small businesses, including a second round of Paycheck Protection Program (PPP) loans. At the time this article was written, the eligibility standards for PPP2 were businesses with 300 or fewer employees who have suffered revenue declines of at least 30% in any calendar quarter between 2019 and 2020 resulting from Covid-19. This criteria differs from the first round of PPP loans, which was driven by “economic uncertainty” of the borrower. The bill also restores tax deductibility for expenses paid with PPP loan proceeds and provides a simplified forgiveness process for all PPP loans up to $150,000.Loan Amounts and Usage Requirement Similar to the first round of the PPP, loan amounts will be based on 2.5 months of 2019 compensation up to $100,000 annual compensation per employee, with limits on owner-employee compensation. The maximum loan amount in round two will be $2 million. The requirements for use of PPP2 proceeds is also consistent with the first tranche of loans, with some notable accompaniments. Like PPP1, at least 60% of the forgiven amount must be used for qualified payroll expenses. However, in addition to payroll costs, mortgage interest, rents, and utilities, proceeds from a second PPP loan may also be used for Personal Protective Equipment (PPE), facility modifications, and supplier costs.What to do Now Companies should be considering whether they meet the 30% revenue decline for one or more calendar quarters between 2019 and 2020, keeping in mind that the final deal may not be exactly 30%, but something slightly more or less than that amount. Likely PPP2 borrowers should contact their bank now to notify them they intend to apply for the loan as soon as it is available. They should also review the calculations of their loan amounts, ensuring that all compensation limits are met. Finally, borrowers may review the list of Frequently Asked Questions prepared by the American Institute of CPA’s relating to the Paycheck Protection Program, found here.How KatzAbosch Can Help KatzAbosch will continue to provide additional in-depth updates around this matter. In the meantime, if you have questions or concerns on how any of the new provisions or available funding may impact your situation, please contact your KatzAbosch representative, or contact us by clicking here.To learn more about our Paycheck Protection Program services, click here.About KatzAbosch: Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As an accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and a Top Workplace four times by The Baltimore Sun.