PPP2: FAQs for NonprofitsJanuary 25, 2021
Is your organization applying for the second round of Paycheck Protection Program (PPP2) funding? There are some unique considerations for NFPs. Here are some FAQs.
Nonprofits, are you applying for the second round of PPP funding? Here, we answer some FAQs we’ve been receiving about the application and forgiveness process.
PPP2 FAQs for NFPs
- What is the forgiveness process if I have a PPP loan of $150,000 or less?
For loans of $150,000 or less, Borrowers are only required to submit a 1-page forgiveness application, which the SBA is expected to issue this month. While the law simplified the forgiveness process, it does not clearly state whether FTE and wage-reduction penalties are eliminated for loans of this size. We are awaiting rules and application materials from the SBA which we hope will clarify this. Keep in mind the organization is still required to attest that they have met the PPP requirements and maintain back up records.
- What are the record retention requirements for the PPP?
Organizations are required to maintain payroll/employment records for 4 years and other relevant records for 3 years. Check out our blog, Paycheck Protection Program (PPP) Loans: What to do After You Have Applied.
- What are the eligibility requirements for PPP Second Draw Loan?
Organizations that are eligible under the PPP Second Draw Loan must meet the following criteria:
-Already received a PPP loan
-Have 300 or fewer employees
-25% drop in gross receipts in any quarter in 2020 compared to 2019
-Finished spending their first loan before they receive Second Draw loan funds but you do not need to have filed for forgiveness before they apply.
-Organizations that engage in extensive lobbying and advocacy work are prohibited from applying for PPP2.
-Maximum amount of the loan is 2.5 months of payroll expenses capped at $2 million.
- Can I select any quarter to show the 25% reduction or do I have to show a specific quarter comparison?
The guidance/application does not specify which quarter you should use for your application.
- What is considered “Gross Receipts” when calculating the 25% reduction in gross receipts?
“Gross receipts,” for the PPP2 calculations uses the same rules used for preparation of the annual Form 990 (Internal Revenue Code Section 6033). This is an area that has additional complexities in Organizations with multiple sources of revenue. Note that:
-Gross Receipts is based on the accounting method that the organization already has in place (i.e. cash or accrual basis)
-The 2020 PPP loan amount is not included in gross receipts
-Conditional contracts and grants, typical of government and some foundation funding, are not includable in gross receipts until the conditions are satisfied.
-There are special rules that apply to investment earnings.
- Are there any limitations on the PPP2 payroll and nonpayroll expenses?
Generally the use of PPP2 loans is the same as for the original PPP loans, except wages related to payroll tax credit and employee retention credit are excluded from Payroll.
- If I want to apply for the “Shuttered Venue Operators” funding can I also apply for PPP2?
If you apply for PPP2 you are not eligible to apply for the “Shuttered Venue Operators” funding. Our recommendation is to compare the potential funding from each and select the funding that will be the most beneficial (or highest value) for your organization. The PPP is capped at $2million vs. the Shuttered Venue Operators is up to $10 million or 45% of 2019 revenue.
- Can my Organization apply for the Shuttered Venue Operators grant and how much funding can we apply for?
-Organizations that can apply for this funding includes live venue promoters, museums, performing arts organization, etc. The organization must demonstrate at least a 25% reduction in revenue.
-Grants are available for up to $10 million or 45% of 2019 revenue.
-Keep in mind that Organizations receiving this grant are not eligible for a PPP Second Draw Loan.