Improvements to the Paycheck Protection Program

Update: On March 25, 2021, Congress extended the deadline to apply for the Paycheck Protection Program to May 31, 2021. Access applications on SBA’s website.

The December 2020 COVID-19 relief package included a number of enhancements to the Paycheck Protection Program (PPP) that NAHB fought hard on Capitol Hill to ensure:

• Allowing home builders associations (HBAs) access to PPP funds;
• Ensuring PPP recipients would not be unduly burdened by a cumbersome loan forgiveness process; and
• Providing for builder members most deeply affected by the pandemic to have the chance at a second round of funding.

In addition, recipients who subsequently have their loans forgiven under the program will be eligible to receive additional tax relief. Learn more about tax relief.

Following these improvements, Congress passed another relief package in March 2021 that provides more relief to small businesses, including an additional $7.25 billion for the PPP, with existing eligibility rules remaining in place, including 501(c)(6) organizations. The measure also provides an additional $15 billion for the targeted Economic Injury Disaster Loan (EIDL) advance program.

501(c)(6) Eligibility

The December 2020 package expanded eligibility to receive a PPP loan to 501(c)(6) organizations, including state and local HBAs, if:

• The organization does not receive more than 15 percent of receipts from lobbying;
• The lobbying activities do not comprise more than 15 percent of activities;
• The cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year that ended prior to Feb. 15, 2020; and
• The organization has 300 or fewer employees.

Professional sports leagues or organizations with the purpose of promoting or participating in a political campaign or other political activities are not eligible under this section.

Streamlined PPP Forgiveness

The December 2020 law also created a simplified application process for loans under $150,000 such that:

• A borrower shall receive forgiveness if he/she signs and submits to the lender a certification that is not more than one page in length; includes a description of the number of employees that were retained because of the covered loan; and provides the estimated total amount of the loan spent on payroll costs as well as the total loan amount.
• The borrower must also attest that he/she accurately provided the required certification and complied with PPP loan requirements. The Small Business Administration (SBA) must establish this form within 24 days of enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements.
• Borrowers also are required to retain relevant records related to employment for four years and other records for three years. The SBA administrator may review and audit these loans to ensure against fraud. The borrower may complete and submit demographic information for all PPP loans at their discretion.
• The application process applies to loans made before, on, or after the date of enactment, including the forgiveness of the loan.

“PPP Second Draw”

• A second loan from the Paycheck Protection Program, called a “PPP second draw” loan was created for smaller and harder-hit businesses, with a maximum amount of $2 million.
• In order to receive a PPP loan under this section, eligible entities* must:
  • Employ no more than 300 employees;
  • Have used or will use the full amount of their first PPP; and
  • Demonstrate at least a 25-percent reduction in gross receipts in the first, second or third quarter of 2020 relative to the same 2019 quarter. Provides applicable timelines for businesses that were not in operation in Q1, Q2, Q3 and Q4 of 2019. Applications submitted on or after Jan. 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020.
• Eligible entities must be businesses, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.

Other Notable Provisions

• The deadline that a borrower has to use their PPP funds is extended through Sept. 30, 2021.
• Allowable expenditures of PPP funds now cover the purchase of personal protective equipment (PPE) for employees.

* As per SBA guidelines, home builders engaged in speculative building, multi-family property owners, and land developers are not eligible for the second draw program.