On December 27, 2020, the President signed the Consolidated
Appropriations Act, 2021 (“2021 Act”), which contains
the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act (“Economic Aid Act”). The acts contain
changes to the Paycheck Protection Program (“PPP”) that
are intended to limit assistance to small businesses that need the
financial support. The following highlights the impact of the 2021
Act and the Economic Aid Act on PPP loans.
Tax Treatment of the Paycheck Protection Program Loans
The 2021 Act provides for special tax treatment in Division N,
Section 276 for forgiveness of loans granted pursuant to the
original Paycheck Protection Program under the CARES Act
(“Existing PPP Loans”) and any new PPP loans
(“New PPP Loans”) under the Economic Aid Act.
