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Senate proposes revisions to Paycheck Protection Program

Jul 31, 2020

On July 27, U.S. Senators Marco Rubio (R-FL) and Susan Collins (R-ME) introduced the Continuing Small Business Recovery and Paycheck Protection Program Act, which is part of the larger $1 trillion GOP-proposed HEALS Act.

If enacted, this bill would provide a second round of PPP loan funding for certain small businesses, expand the scope of eligible and forgivable expenses, create an automatic forgiveness process for those with PPP loans of less than $150,000 and a streamlined process for those with loans between $150,000 and $2 million, and expand PPP loan eligibility to certain entities that are currently excluded.

Highlights of this bill include:

1. Allowing a second PPP loan

The bill would allow a second PPP loan of up to $2 million, calculated in the same manner as the first loan, available to non-publicly traded entities that were (with certain exceptions) otherwise eligible for an initial PPP loan.

Eligible entities must meet additional criteria, including, in the case of a for-profit business, that it:

  • Employs not more than 300 employees or meets either the SBA’s applicable gross receipts or alternative size standards,
  • Had gross receipts during its first or second quarters in 2020 that are at least 50% or less than those of the same quarter during 2019. There are several alternative tests for borrowers that were not in business in those quarters during 2019, and
  • Has not already borrowed more than $10 million in the 90 days prior to approval of this new loan, which serves as the aggregate limit for both loans.

2. Creating four new classes of eligible and forgivable non-payroll costs for all PPP borrowers.

These four proposed classes are:

  • “Covered operations expenditures” consisting of payments for any business software or cloud computing services that facilitates business operations.
  • “Covered property damage costs” consisting of uninsured costs related to property damage due to public disturbances during 2020.
  • “Covered supplier costs” consisting of expenditures to a supplier of goods under a pre-February 15, 2020, contract for goods that are essential to the operation of the borrower at the time incurred.
  • “Covered worker protection expenditures” for capital or operating expenses related to maintenance of standards for sanitation, social distancing or other worker or customer safety requirement to comply with COVID-19 requirements or guidelines issued by certain federal agencies and the CDC during the period March 1-December 31, 2020.

3. Selecting a covered period

The bill would give all borrowers the ability to select a covered period that begins on the date of loan origination and ends on a date that is between eight weeks after origination and December 31, 2020.

4. Providing a streamlined loan forgiveness process

For loans not more than $150,000, borrowers need only sign and submit to the lender an attestation that it made a good faith effort to comply with all the PPP loan provisions of the CARES Act, as amended, and that it will retain records for three years following this attestation that prove its compliance.

For loans between $150,000 and $2 million, borrowers are not required to submit documentation of covered payroll or non-payroll costs claimed for forgiveness, but rather retain these records for three years following submission of its forgiveness application.

5. Expanding eligible borrowers

The bill would expand eligible borrowers. Internal Revenue Code Section 501(c)(6) organizations such as business leagues, chambers of commerce, destination marketing organizations and others would become eligible for a PPP loan, subject to meeting certain funding source and lobbying expenditure tests.

Also, entities in a federal bankruptcy proceeding that are otherwise eligible for a PPP loan may apply for a loan, upon court approval.

Keeping you updated on PPP bills and requirements

It remains to be seen if and when this bill and any amendments to it will be passed by the Senate and House of Representatives. Wipfli will monitor its progress, as well as the progress of any other important legislation, and continue to inform as events unfold. 

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Terry Hoover, CPA, ABV
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