January 21, 2021

PPP Update: Consolidated Appropriations Act

Category: Administration | Tags: loan, new act, paycheck prevention program

Posted by Meagan

From the desk of our Vice President of Operations:

Thank you for your patience during this interim period while our government officials have clarified the original Paycheck Protection Program and created the Consolidated Appropriations Act of 2021. All of us have had to work through the details and nuances of this new act and today we have created a summary of the key bullet points.

The Act has the same basic terms as the original PPP which has reopened to accept applications and has the following requirements:

• The organization has to have been in operation as of 2/15/2020
• Have fewer than 500 employees
• 501(c)(6) can also now apply
• Calculated at 2.5 times average monthly payroll costs  (limited for employees making >$100k)

If you took the initial PPP loan:

It also provides for second draw PPP loans under these circumstances:

• 300 or less employees
• 25% reduction of gross revenue in any comparable 2019 / 2020 calendar quarter
• Have (or will have) used all first draw funds before the second draw
• For loans of $150k or less, documentation is not required at application but will be required with forgiveness application
• For loans >$150k, documentation is required at time of application
• Requires economic necessity certification

As you consider your next steps, please feel free to contact your Accountant or Payroll Specialist for additional information regarding your specific organization!

The following applies to both first and second draw loans

• Borrower can choose their covered period that is between 8 weeks and 24 weeks.  In other words, it can end on any date between that range.
• There is simplified one page forgiveness available for loans of $150k or less
  • Report asks for:
    • Loan amount
    • # of employees retained
    • Estimate of loan proceeds spent on payroll
  • You are required to retain records for 4 years

Additional information regarding the Employee Retention Credit (ERC). 

• This is available for all businesses that have had a decline of 50% in any calendar quarter 2020 compared to 2019 or 20% drop in any calendar quarter from 2021 to 2020.
• Extended through 6/30/2021
• Increased credit from 50% to 70% of qualified wages
• Can take both ERC & PPP but NOT for the same wages

Church Law & Tax Resource:

As a supplement to these bullet points, we are also including an appropriations act summary from Church Law & Tax, an entity that we trust to disseminate accurate information.