COMMENT
The president signed the second COVID-19 relief bill that funds $ 285 billion for the Payroll Protection Program (PPP), created in April 2020. In Vanderbloemen, we were able to serve literally hundreds of thousands of churches, Christian schools, non-profits and value-based businesses through the original PPP process with weekly Facebook Live events, custom templates and blogs tracking updates. We are now ready to restart the process and help more organizations through the second PPP. Here are some of the things you need to know today.
Things you need to know about PPP # 2
1 First, the climate has changed in the United States for churches, Christian schools and nonprofits that receive money from the government to maintain their staffing levels. Our CEO, William Vanderbleomen, does an excellent job explaining the current events in this article “Stop criticizing churches for receiving government aid in a pandemic.” During the original PPP, there was a lot of concern and media challenges for the organizations that participated in the program, however, the climate has changed in the past 9 months.
two If you received PPP # 1, you are eligible to apply for PPP # 2 if you meet the requirements that will come out of the Small Business Association in approximately 10 days after the bill is signed by the president. If you participated in PPP # 1, it is necessary that you have used or have used all the loan money to apply for PPP # 2.
- Changes in employee count: For PPP # 1, the maximum number of employees you could have to be eligible was 500. The new employee limit for PPP # 2 is 300 employees per physical location.
- The total loan amount has reached a maximum of $ 10 million for PPP # 1. The loan amount for PPP # 2 is $ 2 million.
- The new pardon period is 8 or 24 weeks.
3 – One of the main new items or requirements in PPP # 2 that was not in PPP # 1 is that organizations are required to have 25% less gross revenue in a quarter of 2020 compared to the same quarter in 2019. For example, if in By the second quarter of 2020, your church’s total revenue was $ 750,000 and your church’s total revenue was $ 1,000,000 in the second quarter of 2019, so you qualify. It appears from the text of the bill that an organization can compare any quarter in 2020 (Q1-Q4) with the comparable quarter in 2019 (Q1-Q4).
- Borrowers who did not trade during the first, second or third quarter of 2019 (January 1 – September 30), but were in the market during the fourth quarter of 2019 (October 1 – December 31), can compare the first, second, or third quarter of 2020 (January 1 – September 30) to the fourth quarter of 2019.
4 The details are yet to come about the equivalent full-time employee requirements when the coverage period will start and end, etc., but one thing is certain: this program is a refund of the original PPP # 1, not the start of a program totally new. Therefore, it is essential to incorporate what we learned during PPP # 1 and apply it to PPP # 2.
5 Churches, non-profit organizations, Christian schools and most small businesses are included in PPP # 2.
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6 PPP loan # 2 is calculated based on 2.5 months of payroll. This is 2.5 times the average of the total monthly payment of payroll costs during 2019 or the one year period before the loan is made. Companies classified as restaurants can use the 3.5 payroll cost multiplier to create their PPP # 2 loan.
7 The expenses for which the PPP # 2 loan can be used have expanded (compared to PPP # 1) to include the following:
- 60% used for payroll and benefits;
- 40% used for mortgage interest or rent payments, utilities and interest (assumed to be equal to PPP # 1);
- Covered operating expenses: Payment for any software, cloud computing and other human resources and accounting needs;
- Material damage costs covered: costs related to material damage due to public disturbances that occurred during 2020 that are not covered by insurance;
- Supplier covered costs: Expenses with a supplier under a contract, purchase order or goods order in effect prior to contracting the loan which is essential for the recipient’s operations at the time the expense was made. The costs of the perishable goods supplier may be incurred before or during the term of the loan;
- Covered worker protection expenses: personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent state and local COVID-19 guidelines during the period between March 1, 2020 and the end of the national emergency declaration period.
8 The covered period is the time that the loan money must be used by the PPP # 2 borrower to be eligible for forgiveness. The PPP # 2 covered loan period must start on the loan origination date. The end date can be 8 weeks or 24 weeks after the loan origination date, or any date between 8 weeks and 24 weeks. In addition, the period covered for PPP # 1 loans can now extend until March 31, 2021, instead of December 31, 2020.
9 There is a simplified application process for loans below $ 150,000.
10 Prior to PPP # 2, the expenses used with the PPP # 1 loan were not tax deductible for small business owners. However, PPP # 2 clarifies that expenses paid with PPP # 1 and PPP # 2 are tax deductible for business owners.
11 If you are a small business owner, you can now deduct 100 percent of your business meals at a restaurant in 2021 and 2022.
12 For all nonprofits and churches, the charity contribution above the line is extended to 2021 by $ 600 for married couples filing jointly and $ 300 for other filers. Therefore, these rules currently apply to 2020, but now these additional charity deductions above the line are extended to 2021.
Stay tuned for more clarification as we learn more about this bill.
Sutton Turner is the Director of Operations for Vanderbloemen, who serves teams with a greater purpose, aligning their personnel solutions for growth: hiring, compensation, succession and culture. Through its search for executives and consulting services, Vanderbloemen serves churches, schools, non-profit organizations, family offices and Christian businesses throughout the United States and internationally.