Highlights from a panel discussion, Leah Gistenson planned and moderated for the Turnaround Management Association’s Distressed Investment Conference, “When the Money Train Ends – Deals and Steals Post PPP Stimulus,”
The 2021 Consolidated Appropriations Act—Round 2 of the Paycheck Protection Program is a new $900 billion COVID relief package that includes $284 billion in aid for small businesses through a second round of PPP forgivable loans. This second round of stimulus loans is intended for even smaller businesses. To be eligible, a business has to have fewer than 300 employees and show a 25% drop in revenue. And for at least two weeks (beginning February 23, 2021), the maximum number of employees a borrower can have is capped at 20. The federal government also lowered the maximum that could be borrowed from $10 million to $2 million and expressly disallowed public companies (with limited exceptions).
To further help small businesses, the approved uses of these loans were expanded to include additional ordinary course expenditures (such as computer networks to facilitate remote work).Another significant change is that when the loans are used for payroll expenses, the borrower is still entitled to a payroll tax deduction—even if the loan is forgiven.