COVID-19 Funding for Small Businesses (January 2021)

Below is general information concerning PPP & EIDL funding for small businesses.

 

Paycheck Protection Program (PPP) Loans

The legislation includes over $300 billion for first and second forgivable PPP loans. Unlike the prior loan program, this round will truly be limited to small businesses that incurred a loss of revenue. Eligibility is limited to: 

  • Businesses with 300 or fewer employees that have sustained a 25% revenue loss in any quarter of 2020 as compared with the same period in 2019. 

  • Small 501(c)(6) organizations that are not lobbying organizations and that have 150 employees or fewer, such as local chambers of commerce, economic development organizations, and tourism offices.

  • Certain 501(c)(6) nonprofits and Destination Marketing Organizations with 300 or fewer employees that do not receive more than 15 percent of their revenue from lobbying.

  • Local newspapers and T.V. and radio stations previously made ineligible by their affiliation with other stations.

Availability – Many banks have not opened applications for the second round of PPP funding because SBA has not provided guidance as of yet.

 

How to Apply:  Loans are available through banks such as US Bank, Bank of America, and Kabbage.

Forgivable Expenses:​

  • Payroll costs – Including additional group insurance payments, including vision, dental, disability and life insurance.

  • Operational Costs, including mortgage/lease costs

  • Property Damage Costs

  • Supplier costs on existing contracts and purchase orders, including the cost for perishable goods at any time.

  • Investments in facility modifications and personal protective equipment needed to operate safely and technology operations expenditures.

Loan Size:  Establishes a maximum loan size of 2.5 times the average monthly payroll costs, up to $2 million.

*Allows small businesses assigned to the industry NAICS code 72 (Accommodation and Food Services) to receive PPP second draw loans equal to 3.5 times their average monthly payroll costs in order to help these businesses combat onerous State and local restrictions.

Loan Forgiveness:  Full loan forgiveness is available if the borrower spends at least 60% of the second draw on payroll costs over either an 8-week or 24-week period selected by the borrower. 

Simplified Loan Forgiveness:   The loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less. Request for loan forgiveness has to be submitted.

 

Common Documents Necessary for PPP application

  • Average monthly payroll costs (for businesses with employees)

  • Proof of Self Income (for sole proprietor/partnership with no employees)

  • Proof of Business Ownership

  • Driver’s License

  • Email Addresses for All Owners

  • Proof of Business Operation and Status with Secretary of State

  • Business needs to be in good standing with the State

 

Economic Injury Disaster Loans

This loan provides economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue.  The loan must be used for normal business operating expenses.  This loan is not forgivable and must be paid back.

 

Availability:  Small Business Owners can apply immediately.

 

How to Apply:  https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loans

 

Interest Rate & Terms

  1. 3.75% for businesses

  2. 30 Year term

  3. No pre-payment penalties

  4. Payments are automatically deferred 1 year, but interest will continue to accrue. 

    • You have the option to make payments earlier than the one year start date.

 

 

COVID-19 Tax Updates (March 2020)

Tax Deadlines
The deadline to file tax returns has been automatically extended to July 15, 2020. The extension also applies to payments normally due April 15th, such as tax return balances due and quarterly estimated tax payments.

CARES Act Provisions
The CARES Act was recently signed into law to provide financial relief to those impacted by COVID-19. One of the most discussed provisions is the tax rebates. 

  • To receive the rebate, taxpayers must have valid SSNs and can not be a dependent of another taxpayer. There are very few exceptions to this rule.

  • You will not have to pay this rebate back.

  • Rebates will be sent to taxpayers in the following amounts:

    • $1,200 (Single, Married filing Separately, Head of Household)

    • $2,400 (Married filing Jointly)

  • Rebates will be reduced as your adjusted gross income (AGI) exceeds applicable thresholds. Rebates are phased out to $0 when AGI exceeds the following amounts:

    • Single or Married Filing Separately - $99,000

    • Head of Household - $146,500

    • Married filing Jointly - $198,000

  • There is an additional $500 provided for each dependent under 17. 

  • Rebates will be calculated based on a taxpayer's 2019 filed tax return. If the taxpayer has not filed the 2019 return, the rebate calculation will be based on the filed 2018 tax return.

    • If there are taxpayers that only receive Social Security or Veterans Disability Benefits AND do not file a return, the amount will be based on information provided by Social Security.

  • Rebates will not be reduced by back taxes owed by a taxpayer. However, it will be reduced if a taxpayer owes back child support.

  • The IRS will attempt to send the rebate electronically to the account number used on the last tax return. If the account is closed, a check will be issued to the last address on record.

  • A firm timeline has not yet been established as to when checks will be distributed.

Additional guidance is to be provided by the IRS. Updates can be found here: