Page 10 - NBIZ February 2021

• 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-
2
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.
census.gov/cgi-bin/sssd/naics/naicsrch?code=72&search=2017%20
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 https://home.treasury.gov/
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; https://www.cohnreznick.com/insights/
second-round-of-ppp-loans-what-to-know;https://www.forbes.com/sites/
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.
10 NBIZ ■ February 2021