Earlier this week, President Trump signed into law the $900 billion coronavirus relief bill that Congress passed on December 21. There are several items that are of particular interest to dealerships For instance, the bill clarifies that expenses paid for using Paycheck Protection Program (PPP) loan proceeds are tax deductible even when the loan is forgiven.
The legislation also provides funding for a second round of PPP loans to eligible businesses, even if they previously received a PPP loan. The second round of loans has some differences from the first round.
- To be eligible, a business must have fewer than 300 employees, have used the full proceeds of their first PPP loan, and must demonstrate that they had at least a 25% reduction in gross revenue during a quarter in 2020, compared to the same quarter in 2019.
- The maximum amount of the PPP loans has been decreased to $2 million.
- Borrowers will still use 2.5 months of average monthly payroll in calculating their loan amount, based on either the prior 12 months or calendar year 2020.
- Businesses with multiple locations that were eligible under the initial PPP requirements may not have more than 300 employees per physical location.
- Waiver of affiliation rules that applied during the initial PPP loans also apply to a second loan.
- The covered period can be either 8 or 24 weeks.
- In addition to payroll, rent, and utilities, there are additional eligible expenses for which loan proceeds may be used.
- For loans under $150,000, borrowers may submit a certification attesting that they meet the revenue loss requirement.
Details of the COVID relief bill can be found in this NADA summary.