More than five million small businesses have been approved for and received Paycheck Protection Program (PPP) loans in 2020, totaling more than $525B. These loans are intended to keep employees on payroll and small businesses in operation throughout the coronavirus pandemic. For many business owners, the ability to have their loan forgiven, in whole or in part, is the biggest draw.
The PPP launched in April 2020 and disbursed $350B in just two weeks. Later, Congress allocated an additional $310B for a second round of PPP funding and extended the loan application deadline. In June 2020, the PPP Flexibility Act was signed into law. This increased the loan forgiveness covered period, reduced the percentage of funds required to be spent on eligible payroll costs, and extended the loan repayment term.
Congress recently passed The Coronavirus Response and Relief Supplemental Appropriations Act of 2021, a $900 billion COVID relief package to deliver the second round of economic stimulus for individuals, families, and businesses. The Act was signed into law on December 27, 2020. The relief package includes an additional $284.45 billion in funding for first-time and second draw PPP loans to help small businesses.
As tax season looms, PPP loan recipients may be wondering what they need to do to prepare.