To embed, copy and paste the code into your website or blog: The Paycheck Protection Program (PPP), originally part of the March 27, 2020, CARES Act, has undergone several changes since its inception, including June’s PPP Flexibility Act, a myriad of Interim Final Rules and other guidance issued by the Small Business Administration (SBA). On December 27, 2020, a new stimulus bill (the Consolidated Appropriations Act, 2021) was signed into law, comprehensively changing the PPP and associated small-business provisions of the CARES Act. Tax treatment of PPP loans The new stimulus bill provides businesses with additional relief by clarifying that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is subsequently forgiven. Additionally, the forgiven portion of a PPP loan or Second Draw Loan (discussed below) shall not be included in the gross income of the borrower, no tax attribute shall be reduced, and no basis increase shall be denied by reason of the exclusion from gross income of such forgiven loan.