Pandemic Resource Update 1-13-21
Happy New Year everyone! There is a lot of important information below. Please review carefully!
PPP (Paycheck Protection Program) Loans – “Second Draw”
As you have likely heard by now, the PPP application process will reopen to allow select businesses to apply for a second draw on PPP loans.
Eligible businesses must have:
Been in business before February 15, 2020
Fewer than 300 employees per location
Used, or will use, prior PPP loan if previously received
Seen at least 25% revenue decrease in gross receipts during any quarter of 2020 (compared to the same quarter in 2019)
Important notes about Second Draw PPP loans:
The maximum loan amount is $2 million. Application process is simplified for loans below $150,000.
The 60-40 cost allocation between payroll and non-payroll costs will continue to apply. For the remaining 40%, funds can be used for:
Mortgage/rent
Operations expenditures (i.e. software and cloud computing needs)
Property damage costs due to public disturbance
Supplier costs for supplies ordered before the loan was received, or perishable goods ordered before or during the loan.
PPE equipment for employees purchased to comply with guidance from the Department of Health & Human Services, the Occupational Safety and Health Administration (OSHA), the Centers for Disease Control, or a state or local government.
Borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs.
NAICS code:
For any businesses that have an NAICS code beginning with 72xxx qualifies for a maximum loan amount of 3.5x the average monthly payroll costs for 2020.
For any business not in NAICS code 72xxx, they qualify for the same maximum loan amount as PPP Round 1 of 2.5x the average monthly payroll costs for 2020.
Please note that the application forms are available to help you determine what documents your lender needs from you for either of these applications:
PPP First Draw Borrower Application Form (generally for borrowers who did not previously receive a PPP loan)
Extension of the Debt Relief Program (Section 325 of full text)
The extension on the debt relief program resumes the principal and interest payments on SBA 7(a) and SBA microloans that was established by the CARES Act.
This means that if your loan payments were paid by the SBA under the original CARES act that you are eligible to have three months of payments made for you in 2021.
We are not yet sure when those payments will start. (I would be surprised if this did not start either in February or March.) In the meantime, continue to make loan payments as agreed.
In a reversal of previous guidance, borrowers will not be receiving 1099’s for their loan payments that were paid by SBA under section 1112 of the previous CARES Act – meaning that the benefit is not going to be considered taxable income. If your business benefitted from this program in 2020, be sure to have this discussion with your tax accountant prior to filing your 2020 income tax returns.
Economic Injury Disaster Loan (EIDL) Updates
When EIDL loans were first activated, businesses were eligible to receive up to $10,000 as an "advance" (treated as a grant) based on the number of employees. Given changing rules, most businesses received no more than $1,000 per employee. Now, businesses in low-income communities can receive the difference, up to $10,000 total. This article may provide more information on whether or not you are eligible: https://www.nav.com/blog/new-eidl-grants-do-you-qualify-777085/
Pandemic Unemployment Assistance, or PUA
The original Pandemic Unemployment Assistance - put in place by the CARES Act in the spring - expired July 2020 and provided $600/week in additional benefits. The updated plan provides $300/week in additional benefits.
PPP First Draw Loans Forgiven Portion - Taxable Income?
After the passage of the CRRSAA into law in December 2020, it is now clear that a forgiven PPP loan is completely tax-exempt and is not taxable income.
You can now write off payroll, rent and utilities as business expenses if you used a PPP loan to pay for them.
While the IRS and Treasury Department originally said otherwise, the CRRSAA in December 2020 changed these provisions so business expenses paid for with PPP funds can be written off like everyday business expenses.
Please be sure to have this conversation with your tax professional prior to filing 2020 tax returns.
Dane County Grant Program
Grant applications are now open for a new round of Dane County funding (with the maximum grant amount is $50,000). Criteria includes:
Independently owned and local, with the main office based in Dane County. (Franchises do not qualify.)
Established for-profit business that files taxes – in existence prior to March 15, 2020.
Business has experienced financial hardship expected to continue for at least the next 3 months.
Business revenues decreased 30% or more in 2020 versus 2019.
Learn more and apply here: https://fs20.formsite.com/1vKMWv/ernxekdqgv/index.html
SEO 101 Virtual Workshop – from Social Media Breakfast Madison
Wed, January 20, 2021 | 8:00 AM – 9:15 AM | FREE | Register here.
SEO 101: Tips for Adding SEO to Your Marketing Strategy with Lauren Simonis-Hunter. Lauren is the Digital Marketing Manager at Advarra.