CARES Act Update: PPP 2.0

On December 27, 2020, the President signed into law an additional round of COVID relief legislation that includes much-needed stimulus to small businesses. The full text of the legislative package is a daunting 5593 pages. Business owners should be happy to know that the legislation includes a second round of the Payment Protection Program. Approximately $284 billion is expected to be available to eligible businesses, including those who did not obtain a loan in the initial rounds. 

Second Draws. For many, the most significant aspect of the renewed PPP is that businesses that previously obtained PPP funds will be permitted to apply for a “PPP second draw”. While those who did not previously obtain PPP funds will be subject to the original provisions, those seeking a second round of proceeds can obtain the lesser of 2.5 times their average monthly payroll costs or $2 million. Those in the food service and accommodation industries can receive up to 3.5 times their average monthly payroll. Businesses will be pleased to know that the legislation specifically includes “group life, disability, vision or dental insurance” in its definition of payroll costs. In order to be eligible for a second draw, businesses seeking PPP funds must (1) have fewer than 300 employees; and (2) demonstrate at least a 25% reduction in gross receipts in any of the first three quarters of 2020 compared to the same quarter in 2019. 

Forgiveness & Tax Treatment. Borrowers must spend 60% or more of the funds on payroll costs to receive full forgiveness. Up to 40% may be used on other expenses such as mortgage, rent or utility payments. It’s worth noting that the list of non-payroll expenses has been expanded to include costs for PPE, software, human resources, accounting, and other spending deemed “essential” to business operations. Significantly, the new legislation provides that forgiven PPP loans will be completely tax-free, while any ordinarily tax-deductible business expenses paid from those proceeds will remain tax deductible. 

Simplification. The new legislation simplifies the forgiveness process for borrowers of $150,000 or less, and directs the SBA to publish a one-page forgiveness application form. The application will require (1) a description of the number of employees retained due to the loan; (2) the estimated amount of the loan spent on payroll costs; (3) the total loan amount; and (4) attestation by the applicant to its accuracy and compliance. Lenders will be prohibited from requiring any additional documentation for these borrowers.

Consult with an Experienced Business Attorney. The most simple, sure-fire way to stay on top of important developments, like those discussed in this PPP Update is to remain in contact with an experienced business attorney. By doing so, you can make sure your business is in a position to thrive as we move past this pandemic. If you are interested in obtaining legal advice for your business, please reach out to one of our business attorneys at Surovell Isaacs & Levy PLC by calling us at (703) 251-5400 or email to

Posted in: Business Law