On December 27, 2020, the Consolidated Appropriations Act of 2021 (CAA) was signed into law. In addition to funding new Paycheck Protection Program (PPP) loans, the CAA relaxed certain rules governing the program and made many retroactive changes applicable to PPP loans issued in 2020.

If your organization took advantage of the PPP loan program in 2020, below is a summary of the program rules, before and after the passage of the CAA.

Original Rules
(CARES Act – 2020)
Current Rules
(CAA – 2021)
Covered periodEither an eight or 24 week period.Any period between eight and 24 weeks.Yes, if the forgiveness application has not yet been submitted.
Maximum loan amount for non-seasonal employersGenerally, 2.5 times the trailing 12-month (or 2019) average total monthly payroll costs, to a max of $10 million.Existing rules, plus:
• Alternative method for farmers and ranchers.
Yes, unless the loan was forgiven prior to 12/27/2020.
Maximum loan amount for seasonal employersGenerally, 2.5 times the average total monthly payroll costs over the 12-week period starting 2/15/2019, to a max of $10 million.Seasonal employers can use any 12-week period in the 12-month period starting 2/15/2019.Yes, unless the loan was forgiven prior to 12/27/2020.
Increasing an existing loan amount• Originally, guidance required loans to be disbursed in a single disbursement.
• Subsequent guidance allowed increases for partnerships or seasonal employers who received loans before certain guidance was issued and thus may not have received their maximum loan amount.
• Borrowers who returned all or part of a loan may reapply for an increase up to their maximum loan amount.
• Borrowers who did not accept the full loan amount may request a modification to increase the amount to their maximum loan amount.
Yes, unless the loan was forgiven prior to 12/27/2020.

These increases would not be considered Second Draws.
Eligible expenses for forgiveness • Payroll
• Mortgage interest
• Rent
• Utilities
Existing categories, plus:
• Covered software/cloud
• Covered property damage
• Covered supplier costs
• Covered worker protection
Yes, unless the loan was forgiven prior to 12/27/2020.
Eligible payroll costs •Compensation to U.S. employees
• Tips
• Leave
• Separation allowance
• Group health care
• Retirement benefits
• State/local payroll taxes
Definition expanded to now include:
• Group life insurance
• Disability insurance
• Vision and dental insurance
Streamlined forgiveness Loans ≤ $50,000 may be forgiven by providing a one-page certification.Loans ≤ $150,000 may be forgiven by providing a one-page certification,
but only those ≤ $50,000 can be exempt from any reductions in the forgiveness amount.
Economic Injury Disaster Loan (EIDL) AdvancesEIDL advances are deducted from the forgiveness amount.EIDL advances are not deducted from the forgiveness amount.Yes, regardless of when the loan was forgiven.
Tax deductibilityExpenses used for PPP loan forgiveness are not tax deductible.Expenses used for PPP loan forgiveness are tax deductible.Yes, regardless of when the loan was forgiven.
Employee Retention Tax CreditEmployers receiving a PPP loan are ineligible to take the ERTC.Employers receiving a PPP loan are eligible to take the ERTC. Yes. Additional guidance is needed for allocating qualified wages for borrowers who have already submitted or received forgiveness.

Guide to PPP Loan Forgiveness

If you are looking for more information, we have published a five-part series on PPP loan forgiveness. Some of these articles were originally published before the passage of the CAA and do not reflect the recent modifications to the rules.

If you have any questions regarding PPP loans, the forgiveness process, employee retention tax credits, or any other available Coronavirus relief options, please contact a Clark Nuber advisor.

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This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.