PPP – Paycheck Protection Program Part II, What You Need to Know!

As mentioned last week here in this announcement post, in brevity form, due to the Holidays near the end of the year, an additional stimulus act, was actually signed into law on a weekend (Sunday December 27th, 2020 to be exact)

This new stimulus bill called “The Appropriations Act of 2021” is a massive over 5000 page document, that touches many parts of the economy but most importantly for us … made a second round of PPP II, Paycheck Protection Program funds available.

25% Any Quarter Y/Y Sales Decrease, PPP I before PPP II

The two most important points to know about the second round of the paycheck protection program are as follows:

  1. In order to receive a second round of PPP payments you must have had a 25% decrease in sales in any one quarter in year 2020 versus the same quarter in 2019.
  2. The second most important item to know, is in order to have qualified to take the second round of the PPP II, program you must have taken the first round and used it. If you have not taken the first round you will be forced into taking the first round PPP I before you can get to the second round.

Tax Deduction Clarity

The massive page bill also clarified the ability to write off the loan for tax purposes. Said another way even though the loan is forgiven, as long as the loan was used appropriately, entities will be able to write those expenses off of their taxes effectively making what some call a double dip possible, which was congress’s original intention, but became confused by several IRS statements.

Employee Headcount, Max Loan, Looser Usage

A few other miscellaneous items include lowering of the threshold from 500 to 300 employees, limiting the maximum amount of the forgivable loan to a maximum of $2 million versus the higher amount in the original program, and more flexible spending options versus the mandatory 75% payroll usage in PPP I.

$150k Easy File Forgiveness Threshold

One last item included in the bill was a threshold of a basically $150K for non-invasive forgiveness. What that means if someone had taken the PPP loan of $150K or less, in either part one or part two you were basically have a simple one page document where are you certified you use the funds appropriately and the entity which you receive the loan is not to request any further documents. This does not mean that the small business Association cannot audit in the future but is meant to make the forgiveness program fluid and easy. Think twice of initiating any loan just over the $150k hurdle as the hassle may not be worth the extra funds.

Have a Great “PPP II Updated” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



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