Calculations Guidance Released for Paycheck Protection Program Loans

There has been a flurry of activity since late December and changes are still occurring. The second round of PPP funding; expansion of the Employee Retention Credit (ERC); various introductions of new and/or updated forms; interpretations for calculating revenue reductions; and required documentation to support second draw PPP loans.

PPP second draw loans are now available for companies that have

  • Less than 300 employees or over 300 employees with NAICS code that begins with 72, and
  • validated 25% gross receipts reduction in one quarter calendar year (2019 vs. 2020)

The SBA has provided guidance on the types of documentation a company needs to provide to validate the reduction in revenue.

The SBA has recently updated the loan forgiveness forms to include new allowable expenses which include:

  • covered operations expenditures
  • covered property damage costs
  • covered supplier costs, and
  • covered worker protection expenditures.

Definitions for these expenses are included in the instructions for Loan Forgiveness Application Form 3508, which was revised on January 19, 2021. The SBA also created Loan Forgiveness Application Form 3508S for loans of $150,000 or less for both first and second-draw PPP loans.

For companies filing for loan forgiveness on second-draw loans, they should consider the interplay between the PPP forgiveness application and the ERC credit, since both are now allowed. to Companies should maximize both programs by allocating the lowest amount possible to wages on PPP second draw loan forgiveness and use other expenses to obtain the 100% forgiveness to allow the ERC credit to be maximized where possible.

Please reach out to your BMF Advisor with any questions related to first or second draw applications or loan forgiveness.

About the Authors

Dale A. Ruther
Dale A. Ruther
Partner Emeritus,


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