In an update to the Paycheck Protection Program (PPP-2) for 2021, Congress has allowed for up to forty percent of organizations’ loans to be allocated for Cloud software such as Acumatica Cloud ERP.
The new PPP-2 provides additional funding for small to mid-sized organizations to help them cope with the financial fallout from the COVID-19 crisis.
Business owners will want to know how to leverage this second round of PPP to the best advantage. With strategic planning, you can transform this PPP-2 loan into a grant that does not require repayment.
How Does PPP-2 Work?
The updated Paycheck Protection Program expands eligibility for PPP loan forgiveness to include remote-work-enabling investments in cloud software solutions such as Acumatica ERP.
Qualifying expenditures under PPP-2 apply to: “any business software or cloud computing servicethat facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records, or expenses.”
Some basic stipulations for loan forgiveness:
Businesses must spend 60% of the loan on payroll expenses.
Businesses can invest up to 40% in Cloud and software expenses.
The 40% non-payroll expenses can include rent, utilities, and mortgage interest.
The loan can be used to offset property damage costs resulting from looting or vandalism during 2020.
Loan expenditures that are not forgiven will be repaid at 1% interest within 2-5 years.
Is Your Business Eligible for PPP-2?
Even if your business received the first PPP loan, you might still qualify for PPP-2.
To be eligible,second-time borrowers must:
Have 300 or fewer employees
Have spent or plan to spend the amount of the first loan before applying for the second loan.
Show a 25% decrease in gross revenues in 2020, as compared to the previous year.
First-time borrowers are eligible if they:
Employ 500 or fewer workers
Have a NAICS code beginning with 72 (Accommodations and Food Services) with more than one physical location and less than 500 employees per location
Self-employed persons, independent contractors, and sole proprietors are eligible to apply. PPP-2 also allows more groups to apply for loans, including nonprofit housing cooperatives, newspapers, broadcasters, and local chambers of commerce.
Tips for filing a PPP-2 application
Businesses wanting to apply for the PPP-2 funding have until March 31 to complete the application processand can expect funds within a few days of approval. They will then have 8-24 weeks to use the money.
It will be essential to retain detailed maintain records of how the money was spent in order to claim loan forgiveness. Speak with your accountant, bank, or lender to determine precisely which expenses are forgivable, and track those investments or expenditures closely. (Acumatica ERP can help you track those expenses too – we can show you how.)
Is It Time for Your Company to Invest in Cloud Software Like Acumatica ERP?
The allowance for Cloud software such as Acumatica Cloud ERP was added to PPP-2 in response to the growing recognition that cloud software is 100% necessary for many organizations to maintain business continuity during pandemic lockdowns and social distancing measures.
Would you like to know more about your options for business cloud software investments and how you can apply for PPP-2? Dynamic Tech Services offers consulting and solutions to help our clients get the most out of their critical business technologies.
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