Among many other things, the Covid Relief legislation, just passed by Congress ensures tax deductibility for business expenses paid with forgiven Paycheck Protection Program (PPP) loans, provides fresh PPP funding, and offers businesses facing severe revenue reductions the opportunity to apply for a second loan.
Additionally, the bill raises the PPP simplified forgiveness limit from $50,000 to $150,000.
The bill specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what hundreds of business associations have argued was Congress’s intent when it created the original PPP.
PPP2 loans will be available to first-time qualified borrowers and to businesses that previously received a PPP loan. Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they:
- Have 300 or fewer employees.
- Have used or will use the full amount of their first PPP loan.
- Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
The legislation is extensive and we are continuing to analyze it. Also, we expect significant further guidance from the SBA concerning PPP2. Look for further updates from us and please reach out with any questions.