Financial Resources for Businesses
On February 22, 2021, President Biden announced that the smallest businesses with fewer than 20 employees and sole proprietors will be prioritized by the Small Business Administration for the two weeks in February and March for the Paycheck Protection Program (PPP).
Small Business Priority Timeline: Small businesses will be prioritized for a 14-day period, starting on Wednesday, February 24, 2021 at 8 AM to Wednesday, March 10, 2021 at 4 PM.
The program received $284 billion for small business loans as part of December’s $900 billion COVID-19 relief package and reopened to lenders and borrowers on January 11, 2021. Changes will be aimed at helping sole proprietors, independent contractors and self-employed individuals to receive more financial support by revising the program’s funding formula. Of these businesses, those without employees are 70% owned by women and people of color, and with previous PPP calculations, some were approved for as little as $1 in loans. At least $1 billion is also being set aside for businesses in this category.
Visit the SBA website for more information on PPP program changes, or get matched to a lender in your area.
Federal Financial Assistance - Loans, Tax Credits, Tax Relief
On December 22, 2020, the Federal government passed the Coronavirus Response and Relief Supplemental Appropriations Act (CARES) with $284 billion for the Paycheck Protection Program (PPP) loans for small businesses. In addition, there are multiple funding options offered from the federal government for small businesses seeking relief .
- Paycheck Protection Program (PPP) – Forgivable loans of up to $2 million available to businesses with 300 employees or less.
- Economic Injury Disaster Loan (EIDL) - Loans available through the Small Business Administration up to $2 million for businesses with 500 employees or less.
- SBA Bridge Loans and Debt Relief - The SBA offers various loan options as well as financial reprieve from interest and fees on SBA loans.
- Tax Relief - IRS guidance related to COVID-19 for businesses and individuals.
- Extension of Paid Leave Credits Under the Families First Coronavirus Response Act (FFCRA)
- Extension of Employee Retention Tax Credit (ERTC)
- Extension of Repayment Period for Deferred Employee Social Security Taxes
Apply For Forgiveness For Current PPP Loan
Small businesses that received a federal Paycheck Protection Program (PPP) loan may apply for forgiveness. Visit the Small Business Administration’s PPP website or speak to your trusted legal or accounting advisor for more information. Complete an application from the Small Business Administration and submit it to your lender or the lender that is servicing the loan. Eligible costs that can be forgiven include:
- Payroll costs incurred and paid
- Non-payroll costs such as mortgage/rent, utility payments, transportation
Second Draw PPP Loans
Second PPP loans are available to businesses that received a PPP loan previously and that meet special requirements. Complete a second draw PPP application from the SBA. PPP loans are designed to be 100% forgivable as long as the proceeds are spent in accordance with program rules. Loan requirements include:
- Second-time borrowers must have 300 or fewer employees. The rules of the program may limit participation if your organization has related entities, or if you are in certain industries.
- Businesses must demonstrate a reduction in revenue of at least 25% between corresponding quarters in 2020 and 2019. Special rules apply to businesses that were not in operation for all or part of 2019.
- The maximum amount for second draw PPP loans is $2 million
- Borrowers must have fully spent the loan proceeds from their first PPP loan before their second PPP loan is disbursed
Extension of Paid Leave Credits Under the Families First Coronavirus Response Act (FFCRA)
The COVID-related Tax Relief Act of 2020 (CTRA) extends the tax credit portion of the FFCRA for employers that voluntarily offer paid sick or paid family leave through March 31, 2021. More information is available on the Department of Labor's website.
- Employers with fewer than 500 employees must provide mandatory paid sick and paid family leave for certain reasons related to COVID-19
- Corresponding tax credits are provided to employers for any amounts paid to employees for the required paid leave
- Mandatory leave portion will terminate on December 31, 2020
Extension of Employee Retention Tax Credit (ERTC)
The CARES Act allows eligible employers to claim a federal tax credit with respect to qualified wages paid between March 13 and December 31, 2020. In addition, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the “Act”) extends the ERTC to cover wages paid through June 30, 2021. As of January 1, 2021, the Act changes several qualifications for eligible expenses, including:
- Increases the credit rate from 50% to 70% of qualified wages
- Increases the per employee wage cap from $10,000 in the aggregate to $10,000 per calendar quarter
- Decreases the required decline in gross receipts from 50% to 20%
- Increases the threshold for treatment as a large employer from 100 employees to 500 employees
- Group health plan expenses may be considered qualified wages even if no other wages are paid to the applicable employee
Retroactive to March 13, 2020, the Act provides that employers who receive PPP loans may still be eligible for the ERTC to the extent qualified wages are not paid using forgiven PPP loan proceeds. Find more information on the IRS's website.
Extension of Repayment Period for Deferred Employee Social Security Taxes
The current guidance issued by the IRS (IRS Notice 2020-65) requires that any deferred employee portion of Social Security tax withholding between September 1 and December 31, 2020, must be ratably withheld and paid from wages and compensation paid to employees between January 1 and April 30, 2021, or penalties and interest would begin to accrue on May 1, 2021. The CTRA extends the repayment deadline from April 30, 2021, to December 31, 2021, and the date for penalty and interest to begin accruing from May 1, 2021, to January 1, 2022. Find more information on the IRS's website.