“[ T ] he devil is in the details — and those details are subject to change .”
Maximum loan amount : Borrowers have an option to calculate the maximum loan amount by multiplying the borrower ' s average total monthly payroll in ( a ) the one-year period prior to the date on which the loan is made , or ( b ) calendar year 2019 , by 2.5x . The maximum loan amount is $ 2 million . Similar to the first round , payroll numbers for seasonal employers are calculated differently .
Choose your own covered period : Borrowers are able to choose the length of their covered period so long as it is at least eight weeks and is not longer than 24 weeks .
Use of PPP funds : Congress expanded the types of expenses — in addition to payroll , rent , covered mortgage interest , and utilities — for which these new PPP loans can be used and included in forgiveness calculations :
• Covered operations expenditures : payments for business software or cloud computing service that facilitates business operations ; product or service delivery , the processing , payment , or tracking of payroll expenses ; HR and billing functions , or accounting or tracking of supplies , inventory , records , and expenses
• Covered property damage costs : costs related to property damaged due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation
• Covered supplier costs : expenditures to a supplier of goods that are essential to the operations of the entity at the time at which the expenditure was made and is made pursuant to a contract or order in effect at any time before the covered period or , with respect to perishable goods , in effect at any time during the covered period
• Covered worker protection expenditures : operating or capital expenditures that allow borrowers to comply with requirements or guidance issued by the CDC , HHS , OSHA , or any state or local government during the period beginning March 1 , 2020 and ending on the date which the national emergency declared by the President expires related to the maintenance of standards for sanitation , social distancing or any other worker or customer safety requirement related to COVID-19 . These expenses appear to include PPE , physical barriers that were put in place , expansion of indoor / outdoor space , ventilation or filtration systems , and drivethru windows .
Forgiveness for loans under $ 150,000 : Forgiveness application for loans under $ 150,000 will be simplified to a one-page certification that includes a description of the number of employees the eligible recipient was able to retain because of the loan ; the estimated total amount of the loan spent on payroll costs ; the total loan amount and a certification the church complied with the PPP loan statute ; and regulations issued by the SBA . Borrowers should be aware that while the forgiveness application is simplified , all the rules still apply . All borrowers must retain all employment records relevant to the forgiveness application for a period of four years and all other records relating to PPP and the forgiveness application for a period of three years .
PPP loan forgiveness and Economic Injury Disaster Loans ( EIDL ): The new law repeals the CARES Act provision that required that the amount of the PPP loan forgiveness be reduced by the amount of its EIDL proceeds . This change might increase the PPP forgiveness amount for thousands of churches .
This article is for informational purposes only and is not intended to provide tax , legal or accounting advice . You should consult your own tax , legal and accounting advisors before applying for a PPP Loan . For more on the Consolidated Appropriations Act of 2021 , I suggest reading Summary of Selected Coronavirus Provisions Important to Nonprofits , by Ted Batson
, at CapinCrouse . com .
Joe Park is CEO at Horizons Stewardship
[ www . horizons . net ] whose blogs are followed by more than 48,000 church leaders . He leads a team of 38 ICF-trained generosity coaches and staff who help churches and faith-based nonprofits grow disciples and fund ministry . Contact Park at horizons . net .
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