Paycheck Protection Program Round Two: More Money for Small Business
Author: Roger Beebout, CPA
The Paycheck Protection Program Round Two (PPP2) applications are now being accepted. To see if you qualify these are the PPP2 eligibility requirements:
· Have fewer than 300 employees
· Experienced a drop of at least 25% in Gross Revenue for any quarter in 2020 compared to the same period in 2019.
If you did not get the first Paycheck Protection Program (PPP) loan, you are eligible to apply for the original PPP loan following the original eligibility requirements. Once the first PPP loans are fully expended on qualifying expenditures, you can apply for the PPP2 loan, assuming that you meet the eligibility requirements and applications are still being accepted.
Another large benefit that has been rolled out, yet remains known to many people, is the amendment to the Employee Retention Credit. This program existed at the rollout of the Coronavirus Aid, Relief, and Economic Security (CARES) act, but recent amendments have made many more small businesses eligible for the credit. Below are some of the key amendments to the Employee Retention Credit eligibility.
Effective as of January 1, 2021 through June 30, 2021:
· Increases credit rate of qualified wages from 50% to 70%.
· Reduces year-over-year gross receipts decline from 50% to 20% and allows use of prior quarter to determine eligibility.
· Increases limit on employee wages from $10,000 per year to $10,000 per quarter.
· Increases 100 employee delineations for determining qualified wage base to 500 or fewer employees.
· Now includes bonuses to essential workers.
The original Employee Retention Credit program disallowed participation if you got the PPP loan. The recent legislation amended participation requirements and allowed small businesses to participate even though they have received a PPP loan. However, wages paid for by PPP funds cannot be included in the eligible wages calculation for the Employee Retention Credit.
If you experienced a decline of 50% or more in gross receipts in 2020 and want to discuss your possible eligibility to file for the Employee Retention Credit, please contact us.