Additional PPP guidance featured below:
- PPP Loan Forgiveness and the Enhanced Employee Retention Credit (ERC)
- Delays in Second Draw PPP Loan Applications
- Forgiveness on First Draw PPP Loan is Not Required for a Second Draw PPP Loan; Funds are Still Available
On Monday, the Biden administration announced changes to the Paycheck Protection Program (PPP) to assist small businesses. For two weeks beginning on Wednesday, February 24, through March 9, only small businesses with fewer than 20 employees may apply for new PPP loans. The goal is to help the smallest businesses collect funds to offset financial instability during the COVID-19 pandemic.
Other changes the Biden administration announced plans for include:
- Review the loan calculation formula for sole proprietors, independent contractors and the self-employed, and set aside $1 billion for businesses in this category.
- Increase access to PPP loans for applicants with delinquent or defaulted student loan debt, business owners who are not U.S. citizens, and former felons.
Read the Fact Sheet detailing the Biden administration’s recent PPP loan program changes at whitehouse.gov.
Additional PPP Guidance
PPP Loan Forgiveness and the Enhanced Employee Retention Credit (ERC)
Under section 206(c) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, taxpayers who did not get their Paycheck Protection Program (PPP) loan forgiven can claim the employee retention credit (ERC) when they file their employment tax return. However, the IRS guidance addresses only the situation in which the employer was denied PPP forgiveness. It does not address how the reporting of wages on a previously filed PPP loan forgiveness application will affect an employer’s ability to claim the ERC for wages included on a loan forgiveness application but did not affect the amount of loan forgiveness. It also does not address the reporting of wages for taxpayers who have not yet applied for loan forgiveness.
Consult with your CPA, and if you have not applied for loan forgiveness on your First Draw PPP Loan, we advise that you wait until further guidance is issued.
Delays in Second Draw PPP Loan Applications
Measures implemented by the U.S. Small Business Administration (SBA) to screen for potential fraud in Paycheck Protection Program (PPP) applications are holding up a large percentage of applications, with some delayed a month or more. It is recommended not to re-apply and to continue to work with your lender.
Forgiveness on First Draw PPP Loan is Not Required for a Second Draw PPP Loan; Funds are Still Available
It appears that some lenders require PPP borrowers to apply for forgiveness on their First Draw PPP Loan before they file to seek a Second Draw PPP loan. The SBA and the Department of Treasury do not require this.
Second Draw PPP loan funding is still available. Under the latest reform, only small businesses with fewer than 20 employees may apply through March 9. Currently, the last day for all eligible businesses to apply for a Second Draw PPP loan is March 31, 2021.
Visit the Second Draw PPP Loans web page at sba.gov for additional loan and application information.