The Westerville Area Chamber of Commerce recently shared a few highlights about the CARES Act Extension that we wanted to bring to your attention:
•PPP (Paycheck Protection Program) program will reopen with $284.5 billion to strengthen first time and second time borrowers. (The date of opening the portal has yet to be announced.)
•The program has been expanded until March 31, 2021. Loans for businesses at 2.5 times their average payroll costs and Restaurants and Accommodations 3.5 times average payroll costs ($2million max)
•It enables small businesses to deduct PPP grants from 2020 tax filings. PPP funds are not taxable. IRS can not limit your deductions because of PPP related expenses.
•There is a ‘Second Draw for the PPP loan program’ for businesses under 300 employees and can demonstrate revenue reduction of 25% revenue (normal gross receipts) in 1st, 2nd and 3rd quarters of 2020 relative to 2019 – loan forgiveness has been simplified.
•You have to have exhausted the first round of PPP received before being able to receive the second PPP loan. The maximum loan amount for the second draw is $2 million.
•Independent contractors, sole proprietors and eligible self-employed individuals do qualify for the second draw meeting qualifications noted above.
•PPP loans of less than $150,000 forgiveness requires borrower to complete a 1-page certification that requires the loan amount, the number of employees retained and the estimated total amount of the loan spent on payroll costs.
•To apply for forgiveness, borrowers can apply after 8 weeks and up to 24 weeks.
•To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of 8 or 24 weeks.
•There are a set amount of funds for smaller banks and credit unions to award loans for minority-owned and small businesses.
•Businesses can receive a PPP Loan and the Retention Tax Credit – just cannot use it for the same funds.
•Expands the list of eligible expenses to included covered operations (software, cloud computing, and other human resources and accounting needs); property damage due to public disturbances that occurred during 2020 that are not covered by insurance; covered supplier costs and covered worker protection expenditures.
•Includes for the first time 501(c)6 organizations that include local Chambers of Commerce, housing cooperatives, broadcasters, radio stations and newspapers to be eligible for PPP loans.
•The Employer Tax Credit has been expanded from 50% to 70% on $10,000 in wages per quarter, which is a maximum of $14,000 per employee January 1 through first two quarters ending June 30, 2021. (In 2020 the maximum was $5,000 per employee.)
•The Safe Harbor still applies.
•Updates conflict of interest rules and prohibits publicly traded companies from PPP.
•EIDL (Economic Injury Disaster Loan) Program will re-open $20 billion in the program with $10,000 maximum If you received EIDL funds and not the full $10,000, you can re-apply for the difference.
•Repeals the CARES Act provisions that requires PPP borrowers to deduct their EIDL advance from their PPP forgiveness amount.
•$120 billion to provide workers receiving unemployment benefits will be extended December 26 through March 14. $300 per week supplement.
•Strengthens lender ‘hold harmless’ provisions for lending institutions.
•Provides direct Economic Impact Payments of up to $600 for individuals (earning less than $75,000and $1,200/couples (making under $150,000/couple), in addition $600 per qualifying child. Those that received the Economic Income Payment the first time can expect to receive the second payment the same way.
The bill also includes:
•$7 billion for broadband expansion funding
•$15 billion in funding grants (not loans) for entertainment venues, movie theaters, zoos and museums that are experiencing significant revenue loss. Must demonstrate a significant loss. You cannot apply for these grants and PPP.
•$16 billion for airline support, $14 billion in mass transit assistance and $10 billion for state highways.
•$20 billion for the purchase of vaccines and $8 billion for their distribution making vaccines available at no cost to all Americans who need it.
•$82 billion for k-12 education and university funding to assist in re-opening schools for in-person learning.
Information source: Guide to Small Business COVID-19 Emergency Loans | U.S. Chamber of Commerce