Read on Twitter
Will PPP#2 run out?
Businesses qualifying for both PPP#2 and ERC are incentivized to file as late as possible (until 3/31/21) to extend the 24 week covered period past the ERC period (ending 6/30/21). This is important because the same wages can't be used for both PPP and ERC.
Businesses qualifying for both PPP#2 and ERC are incentivized to file as late as possible (until 3/31/21) to extend the 24 week covered period past the ERC period (ending 6/30/21). This is important because the same wages can't be used for both PPP and ERC.
This is maybe a risky strategy if we are unsure about whether or not the PPP#2 will run out. But it is a calculated risk that I think is worthwhile. Here is why I think funding for PPP#2 won't run out:
1. $525B spent in round #1. We have $284B in round 2 - a $241B difference.
2. Roughly $47B in round #1 was loan amounts between $2M and $10M per loan. Loans are capped at $2M now.
3. Eligible employers are now 300 employee or less instead of 500.
2. Roughly $47B in round #1 was loan amounts between $2M and $10M per loan. Loans are capped at $2M now.
3. Eligible employers are now 300 employee or less instead of 500.
4. Public companies can no longer apply.
5. If it did run out, wouldn't Congress add more funds later like in round #1?
6. Many businesses took the PPP money but saw no revenue drop. Now must have a 25% revenue drop. I have been surprised to see who doesn't meet this so far.
5. If it did run out, wouldn't Congress add more funds later like in round #1?
6. Many businesses took the PPP money but saw no revenue drop. Now must have a 25% revenue drop. I have been surprised to see who doesn't meet this so far.
The 25% revenue drop requirement would seem to eliminate many industries that were generally able to keep operating. Reviewing NAICS codes from PPP round #1 is interesting:
#54 - $67B which includes lawyers, accountants, engineers, and others that would generally be able to work remotely.
#52 - $12B which includes finance and insurance
#23 - $65B which includes construction - much of which was deemed essential or not shut down for long.
#52 - $12B which includes finance and insurance
#23 - $65B which includes construction - much of which was deemed essential or not shut down for long.
#48/49 - $17B which includes transportation and warehousing.
#81/99/None - $41B to other services, nonclassifiable or no NAICS code.
#81/99/None - $41B to other services, nonclassifiable or no NAICS code.
