On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA) which, among other things, makes modifications to the Payroll Protection Program. On March 19, the Small Business Administration issued new Interim Final Rule on the PPP as Amended by the ARPA to address these changes, including the following areas:
- Expanding loan eligibility to any 501(c) organizations other than 501(c)(4)s.
- Clarifying that the alternative size standards that allow certain borrowers with more than 500 employees to be eligible for First Draw Loans do not apply to Second Draw Loans. Borrowers who, together with their affiliates, have more than 300 employees are only eligible if the borrower has an NAICS code beginning with 72 and has no more than 300 employees per physical location or is a news organization or media company that meets certain additional ownership requirements and has no more than 300 employees per physical location.
- Removing the restriction on borrowers receiving both a PPP loan after December 27, 2020 and a grant for shuttered venue operators under the Economic Aid Act (SVO Grant). Instead, the amount of the SVO Grant will be reduced by the amount of PPP funds borrowed after December 27, 2020. Borrowers cannot receive a PPP loan after they have been approved for an SVO Grant.
- Excluding the following from forgivable costs: (a) qualified wages taken into account in determining the Employee Retention Tax Credit (ERTC) under Section 2301 of the CARES Act or Section 3134 of the Internal Revenue Code or the disaster credit under Section 393 of the ARPA and (b) premiums for COBRA continuation coverage taken into account in determining the credit under Section 6432 of the Internal Revenue Code.
The Program is currently open until March 31, 2021, but a bill passed the House of Representatives with bipartisan support to extend the deadline to apply for a loan to May 31, 2021. With the ongoing changes to the PPP, those who may wish to apply should continue to check for updated requirements and guidelines. See our PPP Overview and Guide to Loan Forgiveness for more information.