Important PPP Facts to Know

Originally Published : December 21, 2020

Score one for the grinders!  As we have been toiling along with our heads down, expending every ounce of our emotional and physical energy shoveling, delivering, hiring and firing, hoping and pleading and screaming for more money from our Dearly Elected, finally, at last, there is help on the way.  Congress is set to pass the stimulus package and there is 325 Billion set aside for PPP. 

Joey Regs has sifted through all the available information and here is an overview of what it’s looking like as of tonight.  Of course, it’s all subject to change….

Joey Regs Says:

Full disclosure, I was convinced that PPP: Part Deux was going to be a joke and just as much of a calamity as its predecessor was.  I’ve gotta admit though, it looks pretty good at first blush.  There are some new rules in here that are pretty exciting and almost makes  me think that somebody in D.C. is actually listening after all.  I won’t get ahead of myself just yet though, as there’s still plenty of time for them to screw up the rollout.

The initial Bill text just dropped, and as per usual, we’re here to take it all in, break it all down and let you know what you need to know. A much deeper dive will be coming your way soon, but we’re going to wait on it a bit, as I’m sure there are plenty of revisions coming in the immediate future.  I think we all learned our lesson about acting too hastily last time.  Sometimes the first actors get punished for being too responsible.

In the meantime, check the below and know that we will again be making ourselves available to process these new applications for you, with our friends from Scotto & Melchiorre.  Despite the great psychological harm, we achieved a success rate of 100%  for our clients in our first go around, and we will be striving for the same here when round two opens.

PPP: Second Draw

Select businesses will be eligible for a “Second Draw” of PPP money so long as they meet the following criteria:

  • They do not employ more than 300 employees [per physical location];
  • They have used or will use the full amount of your first PPP draw;
  • They can demonstrate that they had at least a 25% reduction in gross receipts in Q1, Q2 or Q3 of 2020, relative to the same quarter in 2019. 

Not so bad for our industry as it should include most everyone.  Let’s take a look at the major provisions that will remain the same, as well as the ones that are changing. 

Same Old, Same Old – Terms that have not changed

  • There is a 60/40 split required between payroll and “other expenses” to achieve 100% forgiveness;
  • It’s an 8 to 24 week period for your “covered period;”
  • The pull is still re-capitalized as a low interest loan for whatever is not forgiven;
  • You still apply for it through your bank or other lender/platform;
  • The safe harbor provision(s) [for our industry, specifically] w/r/t FTEs still remain – translation: it’s a complete non-issue.
  • Generally, the loan amount will be 2.5X average monthly payroll.  However, there’s an interesting little carve-out that we’ll discuss in the next section, which could be helpful.

New And Improved Terms

  • “Other expenses,” for purposes of calculating your ratios, to qualify for forgiveness had previously been limited to just rent payments and some select utility payments.  That’s it. Cheap AF and not all that helpful.  Well, somebody was listening, because check out what CAN now be included as authorized uses for that $$ under the new Bill:
  • Additional operations expenditures: including payment for any software, cloud computing, and other human resources and accounting needs;
  • Property damage costs related any public disturbances that occurred during 2020 that are/were not otherwise covered by insurance.
  • Certain supplier costs: Expenditures to a supplier pursuant to a contract, purchase order or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made.  Supplier costs of perishable goods can be made before or during the life of the loan.  Just to make sure nobody misses this one: THEY’RE TALKING ABOUT ALLOWING YOU TO PAY YOUR VENDORS WITH THIS MONEY.
  • PPE and adaptive investments to help comply with federal health and safety guidelines related to COVID during the period of March 1, 2020  and the end of the national emergency declaration.
  • And if you haven’t sought forgiveness for your first PPP loan yet, you are now entitled to use these new rules in crunching your numbers for a more favorable outcome!
  • This time around, the loans will be for a maximum amount of $2,000,000.00 per;
  • That interesting little carve-out that I teased above? Well, it looks like certain industries may qualify to receive a loan amount of 3.5X average monthly payroll costs, as opposed to the traditional 2.5X.  And it looks like the broad category is “Accommodations and Food Services.”  Translation: you get more $.  

That’s the quick and dirty breakdown, folks.  And it looks pretty good.  We’re expecting many more details in the days and weeks ahead, and the government appears to be poised to stick to a pretty aggressive rollout timeline here.  As always, stay tuned and we’ll be serving up all of the pertinent info to you. 
Specific details on “Second Draw” applications and assistance coming soon!