2020 Year-end COVID Relief Legislation: Paycheck Protection Program Summary

New year; new PPP. In the waning days of 2020 (Sunday, December 27, to be exact), President Trump signed HR 133, the Consolidated Appropriations Act, 2021, a combination COVID-19 stimulus/relief and omnibus government funding bill passed by the House and Senate on December 21, 2020. The Act provides approximately $900 billion to bolster the U.S. economy amid the continued spread of COVID-19. A key component of the Act is an additional $284 billion funding for the Paycheck Protection Program (PPP). PPP has also been extended through March 31, 2021.

This is good news to the more than 70% of printing and packaging small businesses that were able to continue operations last year in large part due to securing initial PPP loans. Now, a second draw, as well as new initial loans, are available for continued support during the first quarter of 2021. However, there are several key changes that accompany PPP 2.0. These include:

• Eligibility: Companies with 300 or fewer employees that can demonstrate a loss in excess of 25% of gross receipts in any quarter during 2020 as compared to the same quarter in 2019. Special eligibility is set-aside to support first- and second-time PPP borrowers with 10 or fewer employees, along with small business in economically distressed areas. Additionally, there are set-asides provided for loans made by community lenders.
• Expansion: Expands PPP eligibility to included local newspapers and TV and 501(c)(6) non-profits, including tourism promotion organizations and local chambers of commerce, among other entities. This new eligibility extends to national, state and local industry trade associations that have been a critical information link to member companies regarding government action related to the pandemic.
• Amount: Establishes a maximum loan size of 2.5 times average monthly payroll costs, up to $2 million. Provides the ability for a PPP borrower to request an increase in their first-draw PPP loan amount in the event they returned any or all of their first-draw PPP loan or did not accept the full first-draw PPP loan amount.
• Forgiveness: Borrowers receive full loan forgiveness if they spend at least 60% of their PPP loan on payroll costs over a time period of their choosing between 8 to 24 weeks. Removes the requirement that the amount of a borrower’s Economic Injury Disaster Loan (EIDL) Advance Grant be deducted from PPP forgiveness. Provides that forgiven PPP loans will not be included in a borrower’s taxable income, and that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan. This last change was a hard-fought victory for small businesses and one that PRINTING United Alliance lobbied heavily for on Capitol Hill.
• Expenditures: Adds certain allowable and forgivable expenditures, such as: supplier costs on existing contracts and purchase orders, cost for perishable goods at any time, costs relating to worker protective equipment and adaptive costs, and technology operations expenditures. Also allows PPP borrowers to include additional group insurance payments when calculating their PPP payroll costs. This would cover insurance plans like vision, dental, disability and life insurance.
• Simplification: The forgiveness process is simplified for loans of $150,000 or less.

Eligible PRINTING United Alliance members planning to seek PPP funds in 2021 are advised to contact their lenders as soon as possible to ensure their companies are in a competitive position to apply for the next round of PPP. Additionally, consulting a tax/accounting professional regarding use of funds is advised in order to keep pace with new guidance that will accompany this legislation and to preserve a company’s eligibility for loan forgiveness.