Spring 2021 CCSF Contractor Tools v. 2, Spring 2021 | Page 17

What ’ s different for first-time borrowers ? Most of the criteria and calculations for the original PPP program remain in place , e . g ., must have fewer than 500 employees , loan is based on 2.5 months of payroll and benefits , loans are eligible for 100 % forgiveness , loan cap is $ 10Million . There are , however , many improvements for both First Draw and Second Draw borrowers .
What improvements are included in PPP 2.0 ? As part of the new Act , all expenses used to qualify for forgiveness for PPP loans will be tax-deductible . Earlier , it was clear loan forgiveness was deemed to be non-taxable income , but now the expense deductibility makes the PPP loans fully tax-free . This also applies to the first round of PPP loans .
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PPP borrowers ’ are eligible for full forgiveness during a “ Covered Period ” of their choosing between 8 and 24 weeks . With up to a 24 week covered period , most borrowers will be able to qualify for full forgiveness based on payroll costs alone .
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PPP borrowers borrowing less than $ 150,000 will have streamlined loan forgiveness applications – forgiveness applications will be one page , with self-certifications ( of need ), with figures showing headcount retained , amount of loan spent on payroll costs and the total loan amount . More than 85 % of the first round of PPP loans were under $ 150,000 .
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Loan amounts will again be based on 2.5 months of payroll and benefits expenses , but the borrower will be able to rely on 2019 payroll records or payroll records for the 12 months preceding the loan application as the basis for the loan calculation . As mentioned above , accommodation and food service businesses will be eligible for loans based on 3.5 months of payroll and benefits expenses .
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PPP allowable and forgivable expenses expand to include supplier costs on existing contracts and purchase orders , including the cost for perishable goods at any time , costs relating to worker protective equipment and adaptive costs , and technology operations expenditures . Our analysis and experience suggests , however , that most companies will qualify for full forgiveness based on payroll expenses alone .
HOW CAN WE HELP ? SCFOs ( Strategic CFOs ) became PPP subject matter experts in April 2020 . Our group has worked to support clients in their efforts to secure these loans and have them forgiven . We have helped dozens of companies with their PPP loan and loan forgiveness applications . Reach out to get you and your company well positioned for PPP 2.0 . Email contact @ Strategic-CFOs . com or contact us at ( 925 ) 406-4680 for additional guidance .
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