Page 10 - NBIZ February 2021
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• your principal place of residence is in the United
             States; and
           • you filed or will file a Form 1040 Schedule C for 2019
             or meet the specific requirements
           However, if one is a partner in a partnership, one may
        not apply for a separate PPP loan as an individual, if also
        applying for the partnership.
                                                               Maximum Amount Available
        Loan Forgiveness                                          For most borrowers, the maximum loan amount of a
           Similar to the first PPP loan, the SBA will forgive 100%   Second Draw PPP Loan is 2.5x average monthly 2019 or
        of the disbursed proceeds if the recipient meets certain   2020 payroll costs up to $2 million (reduced from the First
        conditions. Part of those conditions includes the time cov-  PPP maximum loans $10 million). However, borrowers in the
        ered. The SBA defines the “covered period” as “the period   Accommodation and Food Services sector may apply for the
        beginning on the date the lender disburses the PPP loan   maximum loan amount for a Second Draw PPP Loan is 3.5x   1
        and ending on any date selected by the borrower that occurs   average monthly 2019 or 2020 payroll costs up to $2 million.
        during the period (i) beginning on the date that is eight   Conclusion
        weeks after the date of disbursement and (ii) ending on the   Despite the increasing divide within our country,
        date that is 24 weeks after the date of disbursement.”
                                                               Congress united to amend the CARES Act loans to provide
                                                               Americans with necessary funds. The Second PPP loans, in
        The forgiveness criteria considered by the SBA include:   the amended CARES Act, will help sustain small businesses
           1. Recipient maintains employee and compensation    while rapidly distributing vaccines emerge to prevent
             levels as the First PPP required;                 COVID-19. With a deadline of only ten days, the SBA was able
           2. Recipient spends PPP proceeds on payroll costs and   to draft the pertinent guidelines. Notably, the Second PPP
             other eligible expenses, including qualified rent,   loans were designed to keep smaller businesses afloat.  With-
             utilities, mortgage interest, and other interest    out the combined efforts within Congress and the SBA, this
             expenses; and,                                    buoy would not have been available for small businesses. N
           3. At least sixty (60) percent of the PPP proceeds are
             spent on payroll costs.                           This article is for informational purposes only. The information
                                                               in this article is derived from reliable source material but its
        The SBA expanded its allowed expenses to include:      accuracy and completeness are not guaranteed. Nothing in
           1. Payment of Second PPP funds on specific employ-  this article should be construed as legal advice.
             er-provided group insurance payments. These may
             include “costs related to the continuation of group   Angeline Vachris Kell is an Attorney at HooverSlovacek LLP.
             health care, life, disability, vision, or dental benefits   She received her J. D. from South Texas College of Law and a
                                                               Bachelor of Arts with a major in Spanish from the University
             during periods of paid sick, medical, or family leave,   of Texas. Mrs. Kell is the 2019-2020 President of the Hon.
             and group health care, life, disability, vision, or dental   Arthur L. Moller/David B. Foltz, Jr. American Inn of Court.
             insurance premiums;”
           2. Payments to refinance SBA EIDL loans made between   Thank you, Steven Leyh, Senior Counsel at HooverSlovacek
             January 31 and April 3 of 2020;                   LLP for your inspiration and assistance.
           3. Operations payments: “Payments for any business
             software or cloud computing service that facilitates
             business operations, product or service delivery, the   Endnotes
             processing, payment, or tracking of payroll expenses,   1  The Accommodation and Food Services sector comprises establishments
             human resources, sales and billing functions, or   providing customers with lodging and/or preparing meals, snacks,
             accounting or tracking of supplies, inventory, records,   and beverages for immediate consumption. The sector includes both
                                                               accommodation and food services establishments because the two
             and expenses;”                                    activities are often combined at the same establishment.
           4. Property damage payments due to looting: Costs        “Excluded from this sector are civic and social organizations; amusement
             related to “property damage and vandalism or looting   and recreation parks; theaters; and other recreation or entertainment
             due to public disturbances that occurred during   facilities providing food and beverage services.” North American Industry
             2020 that was not covered by insurance or other   Classification System, 2017 (“NAICS”), Sector 72, found at https://www.
             compensation”;                                    NAICS%20Search;
           5. Payments to suppliers: Payments made to contractual
             goods suppliers, orders, or purchase orders before   2.  The helpful sources of this article are
             the covered period. (payments to perishable goods are   system/files/136/PPP-IFR-Paycheck-Protection-Program-as-Amended-
             extended); and,                                   by-Economic-Aid-Act.pdf;
           6. Payments for worker protection such as PPE or facility   rohitarora/2021/01/13/what-small-business-owners-need-to-know-about-
             ventilation modification payments.                the-new-round-of-ppp-loans/?sh=5536bfc176bd.
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