PPP LOANS ~ APPLY WITH YOUR LENDING INSTITUTION
EIDL LOANS ~ APPLY WITH THE SBA
EMPLOYEE RETENTION TAX CREDIT ~ ASK YOUR ACCOUNTANT
SBA and Treasury Announce
PPP Re-Opening; Issue New Guidance

The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced on January 8 that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers.

To promote access to capital, initially, only community financial institutions will be able to make:

First Draw PPP Loans on Monday, January 11, and
Second Draw PPP Loans on Wednesday, January 13.
 
The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.

This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and
by allowing certain existing PPP borrowers to apply for a Second Draw
PPP Loan.

Key PPP updates include:

  • PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan. 

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
  • Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

The new guidance released includes:
 
For more information on SBA’s assistance to small businesses, visit sba.gov/ppp or treasury.gov/cares. 

OTHER VERY GOOD INFORMATION


List of Lenders (by State)
Alden State Bank, Fifth Third Bank, and TCF Bank are all included on list.
PPP Loan Forgiveness: The amount of loan that can be forgiven is the lesser of: 
  1. Costs incurred or expenditures made between the date of the origination of the loan and ending on a date of your choosing that is between 8 and 24 weeks after origination for: (a) payroll costs, (b) qualifying mortgage interest or rent obligations, (c) covered utility costs, (d) covered operations costs, (e) covered property damage, (f) covered supplier costs, and (g) covered worker protection expenditures; or 
  2. Payroll costs for the same period divided by 0.60 (this serves as a cap on the total loan forgiveness to ensure that at least 60% of the total amount forgiven is for payroll costs). 
Like original PPP loans, the amount of loan forgiveness can be reduced if the borrower has (1) reduced the number of employees or (2) employee salaries by more than 25%. However, the same safe harbors that apply to original PPP loans apply to Second Draw loans. 


Simplified Application: If your loan was for less than $150,000, there will be a simplified one-page application process for loan forgiveness.
SBA COVID Economic Injury Disaster Loan Deadline Extended until 12-31-21

 The U.S. Small Business Administration announced the deadline to apply for the Economic Injury Disaster Loan (EIDL) program for the COVID-19 Pandemic disaster declaration has been extended to December 31, 2021, pending the availability of funds. Every eligible small business and nonprofit is encouraged to apply to get the resources they need.

 

In response to the Coronavirus (COVID-19) pandemic, small business owners, including agricultural businesses, and nonprofit organizations in all U.S. states, Washington D.C., and territories can apply for an Economic Injury Disaster Loan. The EIDL program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to coronavirus (COVID-19).
Who Qualifies for the
Employee Retention Tax Credit?
When the CARES Act was passed in March 2020, it included the ERTC as an option for financial relief for businesses. But companies could only take a PPP loan or the ERTC in the original bill.

Congress has now changed this so companies can take advantage of both ERTC and PPP, and they even expanded the ERTC for 2021. In the first and second quarter of 2021, employers that meet the eligibility can receive a tax credit for up to $14,000 per employee.

On top of the new ERTC credits that can be obtained in 2021, many businesses may also qualify for smaller credits that were offered in 2020, which are worth a maximum of $5,000 per employee. Some companies that are filing quarterly taxes with a deadline of January 15, for example, should talk to their tax preparers about 2020 ERTC eligibility.

“If I have one takeaway, it’s to pay attention to this tax credit,” Bradley said. “Small businesses had to choose between taking a PPP loan or getting the Employee Retention Tax Credit. A lot of people gravitated toward PPP because, frankly, it was a better deal. Congress has removed that prohibition about taking advantage of both. So now, if you took out a PPP loan in 2020, you can take advantage of the ERTC in 2021 and may be able to apply part of it looking backward for 2020. This is a more generous opportunity than what was originally in the CARES Act.”

If you took out a PPP loan in 2020, you can now take advantage of the ERTC in 2021 and may be able to apply part of it looking backward for 2020.
Elk Rapids Area Chamber of Commerce
Chamber Website | (231) 264-8202