COMMENT
The president has signed the second COVID-19 emergency relief bill, which funds $ 285 billion for the Wage Protection Program (EMP) that was established in April 2020. At Vanderbloemen, we were able to literally hundreds of thousands of churches, Christian schools, non-profits and value-based businesses through the original PPP process with weekly Facebook Live events, personal templates and blogs watching the updates. Now we are ready to reload the process and help more organizations through the second PPP. Here are some things you need to know today.
Things to Know About PPP # 2
1. First, the climate in the US has changed for churches, Christian schools and non-profit money received from the government to maintain their staff levels. Our CEO, William Vanderbleomen, does an excellent job of explaining the current events in this article “Stop Criticizing Churches for Using Government Aid in a Pandemic”. During the original EMP, there were many concerns and media challenges for organizations participating in the program, but the climate has changed over the past 9 months.
2. If you have received OBP 1, you are eligible to apply for OVP 2 if you meet the requirements that will appear before the Small Business Association within ten days of the bill being signed by the President. If you participated in PPP # 1, it is necessary that you have used or used all the loan money to apply for PPP # 2.
- Employee changes: for PPP # 1, the maximum number of employees you may be eligible for is 500. The new staffing length for PPP # 2 is 300 employees per physical location.
- The total loan amount is maximum $ 10 million for PPP # 1. The loan amount for PPP # 2 is $ 2 million.
- The new remission period is 8 or 24 weeks.
3. One of the most important new items or requirements in PPP # 2 that was not in PPP # 1 is that organizations should have 25% less gross revenue in one quarter of 2020 compared to the same quarter in 2019. If, for example, in the second quarter is from 2020 your church’s total income was $ 750,000 and the total income of your church in Q2 2019, then you qualify. It appears from the language in 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 do business during the first, second or third quarter of 2019 (1 January – 30 September), but did do business during the fourth quarter of 2019 (1 October – 31 December), can do the first, second, or third quarter of 2020 (January 1 – September 30) to the fourth quarter of 2019.
4. Details have yet to come about full-time employee-equivalent requirements when the coverage period begins and ends, etc., but one thing is clear: this program is a refund of the original PPP # 1, not the beginning of an entirely new program. It is therefore important to incorporate and apply what we learned during PPP 1 to PPP 2.
5. Churches, nonprofits, Christian schools, as well as most small businesses, are included in PPP # 2.
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6. OBP loan no. 2 is calculated on the basis of 2.5 months’ payroll. This is 2.5 times the average total monthly payment for wage costs during 2019 or the period of one year before the loan was made. Businesses classified as restaurants can use a 3.5 cost wage multiplier to create their PPP # 2 loan.
7. 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% is used for mortgage interest or rent payments, utilities and interest (accepted as PPP # 1);
- Expenses for covered operations: payment for software, cloud computing and other human resources and accounting needs;
- Costs for covered property damage: costs associated with property damage as a result of public disturbances that occurred during 2020 and which are not covered by insurance;
- Covered supplier costs: expenses to a supplier in terms of a contract, order or order of goods in force before the loan is taken out which is essential for the operations of the recipient at the time the expenses were made. Supplier costs of perishable goods may be incurred before or during the term;
- Workers’ Protection Expenditure: Personal protective equipment and adaptable investments to assist a loan recipient in complying with federal health and safety guidelines or any similar state and local guidance regarding COVID-19 during the period between March 1, 2020 and the end of the national emergency declaration.
8. The covered period is the time the borrower of PPP # 2 must use the loan money to be eligible for forgiveness. The covered period of the PPP loan # 2 should start on the date the loan is incurred. The end date can be 8 weeks or 24 weeks after the date of the loan or any date between 8 weeks and 24 weeks. In addition, the covered period for PPP loans may now extend to 31 March 2021 instead of 31 December 2020.
9. There is a simplified application process for loans under $ 150,000.
10. Prior to PPP # 2, the expenses incurred with the PPP # 1 loan were not deductible for tax purposes. However, PPP # 2 makes it clear that expenses paid with both 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 that take place at a restaurant in 2021 and 2022.
12. For all non-profit organizations and churches, the above charitable contribution will be extended until 2021 at $ 600 for those who are married, and $ 300 for other donors. Currently, these rules apply to 2020, but now these additional charity deductions are being extended above the line until 2021.
Stay tuned for more information as we learn more about this bill.
Sutton Turner is the chief operating officer of Vanderbloemen, who serves teams with a greater purpose by adapting their people to solutions for growth: hiring, compensation, succession and culture. Through its well-maintained executive search and consulting services, Vanderbloemen serves churches, schools, nonprofits, family offices, and Christian businesses in all parts of the United States and internationally.