Staying Up to Date on New PPP Loans, Forgiveness and More

On December 27, 2020, President Trump signed into law the $900 billion Consolidated Appropriates Act, Title III stimulus package, which provides a second round of PPP loans, clarifies aspects of the first round of PPP loans issued, and more.

On January 5, 2021, PBO Advisory Group hosted a webinar regarding the new Act, as well as applying for forgiveness of PPP loans, extensions to debt forgiveness, and much more. Below is a brief summary of some of the webinar’s key points. We encourage you to listen to the entire webinar for more detailed information. If you have any questions, please feel free to reach out to our webinar presenters, Francisco San Diego and Scott Palka.

view webinar

 Paycheck Protection Program – Draw #2

Under the new Act, $284 billion is earmarked for the Paycheck Protection Program. The maximum second draw PPP loan amount is $2 million. To be eligible for this second draw, a company must have:

  • Fewer than 300 employees
  • Gross receipts that have fallen by 25% in any quarter in 2020 compared to the same quarter in 2019
  • Applied for forgiveness of a 2020 first draw PPP loan
  • Be a private company (no public companies are eligible)
  • Certify that the loan is necessary to sustain business operations due to economic uncertainty


  • Second draw borrowers can elect an 8-week or 24-week covered period
  • The 60% payroll test is still a requirement, meaning the “payroll” x 1.67 is one of the limiters in the total forgiveness. (An expanded definition of expenses in the new Act can “help” max out forgiveness.)
  • The other key limiter to forgiveness is the amount of the loan itself
  • As with a PPP “first draw” loan, most borrowers will be able to attain 100% forgiveness, just on payroll spending of a second draw loan

To apply, we suggest that you contact your bank to secure a PPP loan application. Some banks have portals in place to accept your application while others are still setting up new portals. If you have not already applied for forgiveness of your first round PPP loan (if you had one), you must do so now. Your application for a second draw cannot be processed until after you have applied for forgiveness of the first loan.

Changes for First Draw PPP Loan Borrowers

The new Act clarifies that expenses forgiven for the first PPP loans are now tax deductible. Business owners are able to claim deductions for expenses covered by PPP loan proceeds. We suggest that you contact your tax preparer if your business has already made 4th quarter estimated payments as you may be due a refund under these new guidelines.

If you had a PPP loan under $150,000 (which is over 87% of all PPP loans), you may now use a simplified forgiveness application.

Applying for PPP Loan Forgiveness

When you can apply for forgiveness varies by bank and we suggest that you contact your bank for specific information. You can apply for forgiveness prior to the end of your covered period. Applications for PPP first draw loans are due 10 months after the end of your covered period or 10/21/2021, whichever is sooner.

EIDL Advance Forgiveness Update

If you received an EIDL advance, the amount of the advance will no longer be deducted from the advance of the PPP loan forgiveness amount.

Additional updates that we encourage you to know about include:

  • Changes to the Employee Retention Tax Credit (ERTC) under the Cares Act
  • Extension of tax credits for emergency and paid family leave Under the Families First Coronavirus Response Act (FFCRA)
  • Extension of repayment of deferred payroll taxes
  • 100% deduction of business expenses for food or beverages provided by a restaurant between 12/1/2020 and 12/31/2022

Applying for a PPP loan and loan forgiveness can be confusing and tedious. PBO Advisory Group’s experienced consultants are ready to assist throughout the entire PPP process. Contact Fran or Scott for more information:

Francisca San Diego | | 858-935-4846

Scott Palka | | 858-935-4847

PBO Advisory Group believes this analysis is correct. However, the guidance in connection with the CARES Act and the Coronavirus Response and relief Supplemental Appropriations Act continues to evolve. Regardless of what supporting documents are required, both for the forgiveness application and the PPP loan application, plan to retain for at least six years after the date you achieve forgiveness. This analysis is for general information purposes only and is not intended to constitute legal advice. As necessary and appropriate you should consult the applicable professionals with respect to the specific situation on any specific matters. This information is based on SBA and Treasury information through December 27, 2020.