CLIENT ALERT: The Paycheck Protection Program: New Law and More Options

By Published On: February 22, 2021

With the advent of the Biden Administration, impeachment, winter storms, the long-awaited rollout of a COVID vaccine, and the prospects of additional COVID-19 relief measures being passed by Congress, it might be easy to overlook important changes to the SBA’s Paycheck Protection Program (“PPP”) that were enacted late last year.

Specifically, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, extended the application deadline for PPP loans to March 31, 2021, and added more than $147 billion to the funds available to the SBA for PPP loans.  The Act also allows certain borrowers that already have received a PPP loan to apply for additional funds.  These so-called “second draw loans” are available only to borrowers that have or expect to have exhausted their initial PPP loan, have no more than 300 employees, and can document at least a 25% reduction in gross income during any calendar quarter of 2020 as compared to the same quarter in 2019.

In addition, the Act added features to the PPP (retroactive to March 27, 2020) that likely will be helpful for borrowers that have not yet had their loan forgiven.  For example:

  • Additional categories of nonpayroll expenses are eligible for forgiveness. These include certain operational expenses (e.g., software and computing services), supplier costs, expenditures for worker protection (e.g., PPE, renovations), and costs to repair uninsured property damage or theft that occurred in 2020 during a public disturbance.
  • Expenses for group life, disability, vision, or dental insurance are forgivable payroll costs.
  • Borrowers may select any covered period (during which loan funds expanded may be forgiven) that ends between 8 and 24 weeks after the loan is disbursed.

The SBA published an Interim Final Rule implementing the new provision of the statute on February 5, 2021, an updated forgiveness application on January 19, 2021, and an updated loan application on February 17, 2021.  Further, while the PPP Questions And Answers document remains on the SBA and Department of Treasury websites and may be useful guidance in some respects, most bear a warning that they have not been updated to account for changes in the law.  Borrowers are cautioned accordingly.

FTLF attorneys Michael B. Glomb and Scott S. Sheffler are available to assist and advise PPP borrowers on all aspects of the PPP.

Upcoming Webinar: Please join FTLF for a discussion of recent developments in the PPP loan program, the SBA’s loan necessity questionnaire, and the SBA’s appeals process in the unlikely event the SBA denies a borrower’s loan forgiveness application.  The webinar will take place on February 24, 2021, at 1:00 PM ET. You can learn more or register here.