Up to 40% of PPP-2 Funding Can Be Used for Software Upgrades – Deadline March 31
By now you’ve heard that the second round of relief from the Paycheck Protection Program (PPP) is underway. New funds totaling more than $284 billion have been assigned to the Paycheck Protection Program, as part of the $900 billion COVID-19 relief package passed in December 2020.
You may not have heard that updates to the Paycheck Protection Program (PPP), also called PPP-2, can now be used for software and cloud upgrades. How did this happen? Congress extended the definition of operational expenses to apply to:
“any business software or cloud computing service that 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 and expenses.”
What does this mean?
This means that non-payroll expenses covered by PPP-2 may now include IT expenses for business continuity. This encompasses everything from accounting software to HR software and monthly subscriptions for cloud software.
Non-payroll expenses, including the new cloud and software allowances, can only make up 40% of the loan amount spent. The rest must be spent on employee payroll.
This is a significant adjustment from the first round of PPP and great news for business leaders who have been planning to make the shift to the cloud but have been stifled by more pressing safety concerns. Investing in cloud software for accounting, HR and payroll is a clear path to leaner, more efficient operations, but the shift has been more difficult for businesses to make because of budget cuts.
Who can apply for PPP-2?
PPP-2 is focused on businesses who haven’t yet received any PPP funding, particularly those owned by women and minorities, as well as nonprofits and cultural venues.
Qualifying circumstances remain unchanged for first-time applicants. Businesses who have already received funds from the program will only be eligible for a second loan if they have 300 employees or less and can prove significant losses. A 25% reduction in gross revenue for any quarter of 2020 qualifies as a significant loss.
Other potentially forgivable costs in addition to cloud computing software include essential expenditures to suppliers, costs for worker protection and facility modifications necessary to comply with COVID-19 safety guidelines.
Eligible borrowers have until March 31, 2021 to apply for new PPP loans. If approved for a PPP loan, a borrower is eligible for 100% loan forgiveness if they meet certain criteria established under the CARES Act (Mar. 27, 2020) and existing SBA rules.
How can Paycor help?
Paycor assists our clients by providing specially configured payroll reports which they can use to complete their PPP loan applications. Paycor reports can be prepared for PPP-2 Loan Applicants or existing borrowers for PPP Loan Forgiveness.
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