The new year welcomed some good news for business owners still facing the financial fallout of the coronavirus pandemic.
The Paycheck Protection Program received additional funding, courtesy of a new law that went into effect on December 27, 2020. But details on how the latest PPP round would work are still unfolding. In an article featured on WRAL TechWire, attorney Bill Durr explained what we know to date and how the new measure "may help many small and mid-sized businesses."
From the article:
Congress included several new or revised eligibility requirements for “Second Round” applicants. The revenue reduction test is a critical new addition to the PPP loan eligibility requirements. A business must demonstrate that it has experienced at least a 25% reduction in gross revenues between comparable quarters in 2019 and 2020. There are other timelines for businesses that were not in operation in Q1, Q2, and Q3, and Q4 of 2019. Applications submitted on or after January 1, 2021, are eligible to utilize the gross receipts from the fourth quarter of 2020 relative to Q4 2019. It is unclear whether this revenue reduction test will replace or merely supplement the CARES Act’s subjective necessity certification. This question may be answered with SBA guidance, but the subjective certification seems somewhat meaningless if a small business has seen a 25% reduction of gross revenue during the same quarter in 2019 versus 2020.