With the approval of the latest round of federal pandemic relief funds on December 27, 2020, struggling small businesses may have the opportunity to acquire additional PPP funding.
The first round of the Paycheck Protection Program (PPP) provided $525 billion in funds to businesses. This second round will provide $284 billion to businesses who accepted funding in the first round and need further assistance.
Similarly to the original PPP, businesses must spend 60% or more of their assistance money on payroll in order for the loan to be forgiven. PPP2 also has a provision confirming the tax deductibility of business expenses paid for with forgiven funds. The IRS has been unclear on this regarding the first round of PPP.
However, these businesses need to prove several things. Most importantly for small trucking operations, businesses must prove that their quarterly gross income has dropped by at least 25% in any quarter of 2020 relative to that same quarter in 2019. For instance, if a business made $100,000 in the second quarter of 2019 but only $75,000 in the second quarter of 2020, they might be eligible to receive more funding.
Here’s all the criteria businesses need to meet in order to be eligible for PPP2:
Have 300 employees or less.
Accepted a PPP1 loan (which must have been used fully or have a plan for full use)
Quarterly income has dropped by at least 25% in any quarter of 2020 relative to that same quarter in 2019.
While some sectors of the trucking industry have been hit very hard by the pandemic, according to this Overdrive article, most will not meet the 25% revenue decrease required for PPP2 funding.
Should you apply for PPP2?
Obviously the first question to ask yourself is if you meet the eligibility criteria above. Check you books and look at your quarterly numbers especially. If you are not eligible, please don’t bog down the system by adding your application to the mix.
Secondly, you should be aware that there is some language that needs clarification in PPP2, so you may want to wait until that is clarified by the SBA. More information here.
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