Comments on: ERC and PPP Affiliation Rules May Make Acquisitions More Attractive

By: Stephen Nelson CPA

Stephen Nelson CPA — Wed, 20 Jan 2021 19:17:32 +0000

In reply to Suzanne.

I guess we don’t really know for sure the details on this, but I think you don’t treat the loans as a single loan of, say, $300,000, but rather two separate $150,000 loans that basically work the same way.

I.e., if you read the statute and the interim final rules, they say second draw PPP loans work like first draw loans. So I think you assume that’s the case.

BTW the documentation thing shouldn’t be a big deal. Even if you have to provide more documentation, seems like getting another $150K makes it well worth the trouble.

By: Suzanne

Suzanne — Wed, 20 Jan 2021 17:48:41 +0000

I was awarded a first round PPP loan under $150,000. I would like to apply for a second round PPP loan also under $150,000. Is each loan treated separately or would the amounts of both loans be combined to one amount? Knowing the new rules for loans under $150,000, if I had two loans under that amount would I submit two attestation forms with supporting documentation or would the two loans be combined for one amount, which would put me over $150,000 and thus have different forgiveness rules. If the two loans are considered as wholly separate amounts and not combined for an amount that would be over $250,000 it would be a much easier process! Thank you.

By: Stephen Nelson CPA

Stephen Nelson CPA — Tue, 19 Jan 2021 16:30:19 +0000

In reply to Dennis Quinn.

I think so. And they were supposed to apply, really, for first draw PPP loans too. Though many folks probably skipped the “consolidation.”

The one thing to keep in mind: The affiliation rules create some loopholes for firms operating in certain industries. Check out the IFRs to see if you’re working with clients like restaurants, for example, where the affiliation rules work differently.

By: Dennis Quinn

Dennis Quinn — Mon, 18 Jan 2021 22:29:36 +0000

My question is Must the affiliation rules always apply for the second round of PPP loans? i have a situation where one company would not qualify since revenue did no decline but increased and the other affiliated company had a 25% decline but when combined they did not have a 25% decline

By: Stephen Nelson CPA

Stephen Nelson CPA — Mon, 18 Jan 2021 15:54:15 +0000

Great insight. Thank you, Dan, for contributing.