Our friends at Duane Morris, LLP have put together a comprehensive guide to the 2nd round of Federal funding related to the COVID-19 Crisis.
The Paycheck Protection Program and Health Care Enhancement Act (CARES Act 2.0) was signed into law on April 24, 2020, providing additional funding for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) program. Subsequent guidance issued since the passage of the CARES Act 2.0, as well as heightened public scrutiny of the PPP loan program, has resulted in further restrictions regarding the types of businesses that are eligible for PPP loans and further scrutiny regarding the business need for the loans. These developments have prompted some applicants to reconsider their need for the PPP loan and whether to return PPP loan proceeds. Additional guidance has been issued on loan forgiveness, addressing audits, how rejected offers of reemployment impact the forgiveness calculation, and whether nonprofit hospitals are eligible for relief under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) as ”nonprofit organizations.” Separately, the Internal Revenue Service (IRS) has issued guidance limiting the ability of borrowers to take certain business deductions if such expenses were incurred using PPP loan funds that result in loan forgiveness. Finally, the SBA announced on April 27, 2020, that it was no longer accepting new applications for the EIDL program.