Don’t Forget to Apply for Your PPP2 Funding

March 22, 2021 by Leave a comment

As we discussed in an earlier article, the second round of Paycheck Protection Program (PPP2) loans is open. If your business qualifies, then we highly recommend applying for this government funding; but do it soon, because the March 31 deadline is approaching quickly!

Under the PP2 loan program, a business can obtain a forgivable loan. The loan must be spent on eligible expenses (like payroll, mortgage interest, utilities, rent, and certain other expenses). As long as (1) the loan it was spent on eligible expenses, (2) at least 60% of the loan was spent on payroll, and (3) employee and compensation levels are maintained, then the loan may be forgivable, which means it does not need to be repaid. As an additional bonus, the loan forgiveness does not constitute taxable income.

To qualify for the PPP2, your business must:

  • have 300 or fewer employees;
  • have previously received a First Draw PPP loan;
  • have used the full amount of the prior PPP loan only for authorized uses; and
  • have experienced at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

To meet the final bullet-point, you need to show the reduction only on in one set of correlative quarters. Most aviation industry businesses experienced at least one quarter of harsh economic circumstances in 2020 so most aviation industry businesses should qualify under this element.

The small business administration has published guidance on how to calculate your maximum loan.

Applications can typically be submitted through your local bank. There are a number of financial organizations that are also processing these loans for businesses who don’t want to use their local bank. The deadline for applying for this program is March 31, 2021.

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Applications Are Opening for PPP2 Forgivable Loans

January 14, 2021 by 1 Comment

As we announced in our December 29th article, Congress has authorized a second draw Payroll Protection Program (PPP2).

The PPP2 loan program is very much like the first round, in that it is a loan that can be forgiven if the proceeds are spent on appropriate authorized expenditures (like payroll). But there are a few differences…

The most important of these differences is that the second draw PPP will be limited to businesses that can show an adverse effect from Covid-19. Nearly all of ASA’s members have been dramatically affected by Covid-19 so hopefully most of our members will be eligible for this program. The manner in which you must show adverse effect is by comparing your 2020 quarterly gross receipts with those of the corollary 2019 quarter. If you can demonstrate that your quarterly gross receipts dropped by 25 percent or more from the corollary 2109 gross receipts for the same quarter, then you meet this prong of the eligibility test. There are also special rules if you were not in business for all of 2019.

Another change is that the maximum business size drops from 500 employees (for PPP) down to 300 employees (for PPP2).

Please note that there are other detailed requirements not repeated in this blog article!

The SBA has published information on PPP2 loans. One particularly useful document explains how to calculate your maximum loan. The SBA information includes a model application form for PPP2 loans. Expect your bank’s application form to look similar but it may not be exactly the same. It appears that some banks have begun to accept applications for PPP2 loans, while others have not yet begun to accept them (but ought to be doing so, soon).

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