Second Stimulus Bill PPP Loan Changes and Eligibility for Second Loans

The Paycheck Protection Program (“PPP”) was created as part of the CARES Act, passed last spring, which amended the Small Business Act (“SBA”) to provide short term loans to companies with fewer than 500 employees. On December 27, 2020, President Trump signed the 2021 Consolidated Appropriations Act, which also contained a stimulus relief bill. Part of that bill was the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venue Act (the “Act”), which made changes to all PPP loans, re-opened the PPP program for new loans, and allowed certain borrowers to obtain a second PPP loan.

This article summarizes some of the key provisions of the Act that impact all PPP loans, as well as those related specifically to second PPP loans.

Existing PPP Loans

  • Tax Treatment: Tax deductible expenses used to generate forgiveness of PPP loans may be taken to reduce taxable income.
  • Covered Period Flexibility: PPP borrowers may set the length of the “Covered Period” for purposes of PPP loan forgiveness at any length between 8 and 24 weeks.
  • EIDL Advance Does Not Affect Forgiveness: Under the CARES Act, PPP forgiveness was reduced by the amount of any Economic Injury Disaster Loan advance received. The Act repealed this provision.
  • Simplified Forgiveness: A new simplified forgiveness process for PPP loans of not more than $150,000 was established, including a one-page forgiveness application.
  • Expanded Forgivable Uses of PPP Loan Proceeds: The Act adds four additional categories of expenses that are now eligible for forgiveness under PPP loans, including covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures.

Second PPP Loans for Eligible Borrowers

  • Eligibility: In order to be eligible to receive a second PPP loan, a borrower must:
      • Have 300 employees or less;
      • Have used or will use the full amount of their first PPP loan; and
      • Demonstrate at least a 25 percent reduction in gross receipts in any quarter of 2020 relative to the same 2019 quarter.
  • Second PPP Loan Terms: Borrowers may receive a loan amount ($2 million or less) up to 2.5 times average monthly payroll costs in the one year prior to the loan or the calendar year. Borrowers in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5 times average monthly payrolls costs.
  • Loan Forgiveness: Borrowers of a second PPP Loan are eligible for loan forgiveness equal to the sum of their payroll costs, covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period.


For small to medium-sized businesses in many sectors of the economy that are still hurting from the COVID-19 fallout, the additional financial relief, and simplified processes for requesting forgiveness of loans, are welcome developments. If you have any questions about the Act and its implications, please contact Fraser Trebilcock shareholder Paul McCord.

We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or

FHEO Notification – Gender Discrimination

On February 11, 2021, the U.S. Department of Housing and Urban Development (HUD) issued a Memorandum Implementing Executive Order 13900 on the Enforcement of the Fair Housing Act. The Executive Order addresses the U.S. Supreme Court’s recent decision in Bostock v Clayton County. The Bostock decision prohibits discrimination on the basis of sexual orientation and gender identity.

HUD’s Office of General Counsel concluded that the Fair Housing Act’s sex discrimination provisions are comparable to Title VII of the Civil Rights Act of 1964 (the subject of Bostock) and because of that discrimination because of sexual orientation and gender identity is prohibited in the administration of HUD’s various programs.

HUD’s Office of Fair Housing and Equal Opportunity (FHEO) now will take and investigate sex discrimination complaints including those because of gender identity or sexual orientation. Local organizations and agencies that receive HUD grants must also comply with this new requirement, among other changes in HUD programs to implement this policy change.  This would mean, among other things, that HUD will no longer discriminate against transgender homeless people.

We expect to see reinstatement of HUD’s 2013 Affirmatively Furthering Fair Housing Rule now that this Memorandum has been issued.

Click here to view the HUD Memorandum:

Stay tuned for more information on changes in HUD programs from Fraser.

If you have any questions, please contact Mary Levine.

Mary P. Levine is an attorney with Fraser Trebilcock, focusing on affordable housing and community development. Mary was the former President and Secretary of the Greater Lansing Housing Commission (GLHC). She can be reached at or (517) 377-0823.

Federal Court Rules in Favor of Restaurant Group for Insurance Coverage Related to Loss of Business Income Due to COVID-19 Shutdown Orders

In one of a series of closely watched cases concerning the extent of insurance coverage available to businesses who have suffered damages as a result of the COVID-19 crisis, a federal district court recently ruled in favor of a group of restaurants that were ordered closed by government authorities.

The U.S. District Court for the Northern District of Ohio ruled in favor of the policyholders on cross-motions for summary judgment in Henderson Road Restaurant Systems, Inc., dba Hyde Park Grille, et al. v. Zurich American Ins. Co., No. 1:20 CV 1239, 2021 WL 168422 (N.D. Ohio Jan. 19, 2021). In the Henderson case, the court ruled that business interruption coverage was available to the restaurant group under a policy issued by Zurich American Insurance Company (“Zurich”).

The property policy at issue provided coverage for suspension of operations caused by order of civil authority or a government order that prohibited access to the covered premises. The policy required that the suspension result from “direct physical loss of or damage to” property located within one mile from the covered premises.

The parties disagreed as to whether such “direct physical loss of” or “damage to” the policyholders’ restaurants occurred under the circumstances. Ultimately, the court sided with the policyholders about the meaning of the phrase “direct physical loss of” the real property, construing what it found to be ambiguities in the language in the policyholders’ favor.

The policyholders argued that they “lost their real property” when state shutdown orders were issued that prevented the properties from being used for their intended purposes as dine-in restaurants. Since the policy language was susceptible to this interpretation, and ambiguities are strictly construed against the insurer in Ohio, the court ruled that Zurich was obligated to provide business income coverage since the policy language could be interpreted in the policyholders’ favor.

The court rejected Zurich’s argument that coverage shouldn’t be available because the restaurants could still conduct carry-out business, finding it unreasonable to expect that the restaurants, which previously relied almost exclusively on in-person dining, should be expected to shift their businesses to a carry-out model. The court also rejected Zurich’s assertion that the policy required a permanent loss.

Zurich next argued the applicability of two exclusions to coverage. First, Zurich argued that a microorganism exclusion precluded coverage. However, the court rejected the microorganism exclusion’s application, finding there was no coronavirus at the restaurants themselves and that “it was clearly the government’s orders that caused the closures,” not the coronavirus. Moreover, the court noted that the parties had stipulated that “none of Plaintiffs’ Insured Premises were closed as a result of the known or confirmed presence of SARS-CoV-2 or COVID-19 at any of the Insured Premises.”

Zurich also argued that the policy’s loss-of-use exclusion should exclude coverage. The court rejected this argument, as well, ruling that “the Loss of Use exclusion would vitiate the Loss of Business Income coverage.”

We will continue to monitor and provide updates on other court decisions happening across the country on the extent of insurance coverage for losses related to COVID-19. If you have any questions about these issues, please contact Thad Morgan, Fraser Trebilcock’s Litigation Department Chair.

Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at or (517) 377-0877.