Pandemic-impacted businesses that did not apply in 2020 for a loan through the Payroll Protection Program (PPP) will be able to apply for forgivable loans until March 31, 2021. PPP loans of up to $2 million are available to eligible businesses , 501(c)(6) nonprofits, housing cooperatives and local news media organizations under the Economic Aid Act that was passed by the U.S. Congress and signed into law in December 2020.

Businesses that received PPP funds in 2020 will be able to “double-dip” — that is, receive additional funds — under certain criteria. The so-called “second draw” rule of the reauthorized PPP allows applications from entities that suffered at least a 25 percent reduction in gross receipts during at least one quarter of 2020 compared to the same quarter of 2019.

Forgiveness rules have become more generous under the new PPP. While the emphasis on payroll expenses (a minimum of 60 percent) to meet forgiveness rules still stands, other expenses (40 percent of the loan total) can now include expenses related to IT, PPE, damage due to civil unrest, and other essentials.

PPP forgiven loans were always nontaxable, but the new law ensures that business expenses paid with forgiven PPP funds can be deducted as business expenses.

Under the first PPP, businesses had to choose between a PPP loan and the Employee Retention Tax Credit — a business could not take both. New rules allow, under certain circumstances, businesses to claim the ERTC, even if they received PPP funds.

For the best explanation we have seen so far about overall changes to business financial programs authorized by the new stimulus act, click here.

The information provided here is a general overview of highlights and should not be seen as legal or accounting advice. Business owners should contact a tax attorney or accountant for advice about how the new rules will affect their enterprise.