Federal Funding Programs Open Soon: Are You Ready to Apply?
The second phase of CARES funding was signed into law on December 27, 2020 in the Consolidated Appropriations Act, 2021. The Act:
- Reopened and funded a second round of Paycheck Protection Program forgivable loans
- Reopened Economic Injury Disaster Loans and the $10K advance, for eligible businesses
The Tax Relief Act of 2020 resolve tax issues related to these programs, expanded Employee Retention Tax Credit, and extended deferral of payroll taxes.
On January 12, 9am, Lt. Governor Susan Bysiewicz will lead a discussion with updates on federal and state programs designed for businesses impacted by COVID-19. Click here to learn more.
Now, the U.S. Small Business Administration is working to put guidelines in place. Applications are NOT open yet (and the SBA website has not been updated). Guidelines will become available toward the end of this week or beginning of next week.
Economic Injury Disaster Loans
- Extended to December 31, 2021
- Allows loans up to $150K at 3.75% interest for small business, 2.75% for nonprofits, payable over 30 years with collateral waived, and personal guarantee required for loans over $25K
- $10K Advance grants are available for eligible businesses in low-income communities, if they did not receive the grant in the last round, or if they did not receive the full amount, in which case they can apply for the difference
Paycheck Protection Program
The applications for the Paycheck Protection Program, as last time, are handled by lenders. Local lenders will need time to understand the new guidelines and set up their application process, as well. You may work with the lender who handled your previous PPP loan or work with a new lender.
Deadline for application is March 31, 2021. Funds are allocated on First Come, First Served basis, so apply early!
Paycheck Protection Program forgivable loans are available for first time applicants and offer a second round for those previously funded. PPP loans:
- Offer amounts of 2.5x average monthly payroll costs, with 3.5x available for businesses that fall under Accommodations and Food Service (NAICS 72)
- Are forgivable when at least 60% covers payroll and 40% is used for qualifying expenses
- Newly issued loans (if not forgiven) have a 1% interest rate and are payable over 5 years
- Collateral and personal guarantee requirements are waived
- Loans are NOT intended to replace lost sales
Small businesses, nonprofits (including churches and qualifying 501(c)6 orgs), sole proprietorships, independent contractors operating on February 15, 2020 are eligible. First round applicants must have 500 employees or fewer, with accommodation and food service operations having 300 or fewer per physical locations. Second round funding is for entities with 300 employees or fewer and demonstrate 25% reduction in gross revenues. A special fund has been set aside for performing arts organizations, museums, and movie theaters, with application priority given to those experiencing the highest percentage of revenue loss.
So in the next week, what can you do to get ready to apply?
At their January 5 webinar, they offered the following list of documents to get ready so you can apply as soon as possible:
- 2019 tax returns or 2019 year-end financial statements
- 2020 tax returns (estimated, Schedule C/K) or 2020 year-end financial statements
- Last 4 quarters of payroll forms (941)
- Verification of the number of employees and payroll incurred over the most recent 12-month period identifying employees earning in excess of $100,000
- Forms 1099-MISC for self-employed individuals