Software Prioritized in PPP Loan Forgiveness Changes

In the first days of spring, March 2021, congress authorized an extension to the Paycheck Protection Program (PPP) deadline to May 31st 2021. Can you believe it’s nearly upon us?

Recent and important changes have made this program particularly important for the livelihood and recovery of construction, particularly small and underserved businesses

Amid the turmoil, occupational health hazards, uncertainty – leaders doubled down and made critical investments to future proof their businesses. Many of these in technology – to support remote working, productivity under strained conditions, improved safety of their workers and more.

Not only did this enable continued construction progress – the businesses leaders that have invested are poised to lead in the time of growth ahead. The combination of tools, newly trained staff and refreshed digital processes enable agile and efficient operations. This sets them up to quickly grow teams and take on new projects with confidence as we enter into recovery.

Ok so I know you’re asking us – what does the PPP have to do with technology?

The Small Business Administration (SBA) expanded the list of authorized uses of loans from the initial contemplated uses (issued in Spring of 2020) for “payroll” to also include (as amended in late 2020) “payments for any business software or cloud computing service that facilitates business operations, product or service delivery, processing payment, or tracking of payroll expenses, HR, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.”  

This change means that loan recipients can use up to 40% of loan proceeds to cover expenditures of construction technology applications. The best part is that it retro-actively applies to both First-Draw PPP loans and Second Draw loans. So, if you used your loans on business software or cloud computing services to facilitate a remote work environment – you may be entitled to forgiveness.

You can get your loan forgiven if, over your “covered period” of 8-24 weeks, you:

• Spend at least 60% of the funds on payroll.
• Maintain employee and compensation levels in the same manner as required for the first-draw PPP loan. This means you need to maintain the same number of full-time employees during your “covered period” and pay these employees at least 75% of their usual compensation.
• And you can spend the remaining 40% of your loan on payroll or other “eligible costs.”

These “eligible costs” include those outlined in the original PPP of Rent, Covered mortgage interest, utilities and, in change from the original program “eligible costs” also includes these which can directly support construction businesses:

• Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines. Businesses might, for example, use some of their PPP-2 money to improve office ventilation systems or provide onsite health screenings.
• Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
• Covered operating expenditures*, which refer to payments for any business software or cloud computing service that facilitates:
  • Business operations
  • Product or service delivery
  • Processing, payment or tracking of payroll expenses
  • Human resources
  • Sales and billing functions
  • Accounting or tracking of supplies, inventory, records and expenses

*In other words, you can spend your PPP money on expenses that keep your business going. In the IT category, this might include accounting software or monthly subscriptions to cloud software. In the suppliers category, this includes everyday operational needs.

Eligibility criteria for Second-Draw PPP loans was also updated to ensure that underserved and small and mid-sized firms are prioritized.

This means, now is the time to look ahead to invest in the future of your business and construction operations.

Consider this ‘perfect storm’ - the barriers to entry have never been lower.

1. PPP funding structures that have considered the infrastructure needed to support remote work and a digital-first model;
2. Adoption case studies widely available and only a phone call away from industry peers to learn from their successes;
3. Competition is high which means a and lower cost of entry for new construction technology tools.

Let's go.

Review and invest in a tech foundation to set your business up for the recovery as we ride out of the COVID-19 pandemic smarter, safer, better - together.

If you have any questions about how this updated framework may apply to your business, you should consult with your professional advisors and/or lenders.

Click here for more legislative details and explanation of this framework.

Click here for the Small Business Association (SBA) PPP program resources.