Thursday, December 31, 2020
On December 27, 2020, President Donald Trump signed into regulation the Consolidated Appropriations Act, 2021 (the 2021 Consolidated Appropriations Act), an omnibus statute that’s comprised of, amongst different legal guidelines, twelve fiscal yr 2021 appropriations payments for the federal authorities and an financial help bundle to help enterprise issues that proceed to face hardships because of the COIVD-19 pandemic. Title III of the 2021 Consolidated Appropriations Act, which is cited because the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Act), amongst different issues, reauthorizes and modifies the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan program (EIDL), as enacted underneath the Coronavirus Aid, Relief, and Economic Security Act (as amended, supplemented or in any other case modified every now and then previous to the enactment of the Act, together with the Paycheck Protection Program and Health Care Enhancement Act, the Paycheck Protection Program Flexibility Act, relevant federal laws and interpretive steerage issued by the SBA and Treasury (the CARES Act)).
Highlights of the Act, because it pertains to the PPP and the EIDL, are as follows:
I. Revival of the PPP, Funds Committed and Application Deadline
The Act revives the PPP by appropriating $284.45 billion to this system, which is a good portion of the $325 billion allotted particularly for small enterprise help within the laws. As detailed under, the Act reopens purposes for companies in search of PPP funds for the primary time (a First Tranche PPP Loan), whereas increasing the approved makes use of for PPP mortgage proceeds and growing flexibility to acquire mortgage forgiveness. The Act additionally permits eligible enterprise issues who beforehand obtained PPP loans to use for a second draw of PPP mortgage proceeds (a Second Tranche PPP Loan), albeit by adopting usually extra restrictive eligibility standards and lowering the utmost quantity of proceeds out there for a second PPP mortgage.
The new software deadline to use for the PPP is March 31, 2021, and the SBA is required to problem laws to hold out the brand new provisions of the revitalized program no later than January 6, 2021.
II. Eligibility Criteria for PPP Loan Applicants
Applicants for First Tranche PPP Loans are required to fulfill the eligibility standards set forth within the CARES Act. PPP debtors in search of a Second Tranche PPP Loan, nonetheless, are topic to a special set of eligibility standards for this system. Any enterprise concern, nonprofit group, housing cooperative, veterans group, tribal enterprise, eligible self-employed particular person, sole proprietor, unbiased contractor or small agricultural cooperative is eligible to obtain a Second Tranche PPP Loan if such enterprise (i) employs no more 300 staff and (ii) demonstrates a 25% discount in gross receipts within the first, second or third quarter in 2020 in comparison with the identical quarter in 2019. Importantly, the utmost variety of staff dimension cap of 300 is lowered from the 500-employee cap contained within the CARES Act that continues to use to First Tranche PPP Loans.
Equally noteworthy is the next checklist of kinds of enterprise issues which might be expressly prohibited from acquiring a Second Tranche PPP Loan, which checklist contains some essential adjustments from the checklist of prohibited candidates for a First Tranche PPP Loan:
A enterprise or group that was not in operation on February 15, 2020;
An individual or enterprise that may be a recipient of the “Shuttered Venue Operators” grant as established by Section 324 of the Act;