On January 6, 2021, the Small Business Administration (SBA) issued newguidanceon which businesses are eligible and how to apply for thenew round of Paycheck Protection Program(PPP) funds authorized in the new Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) signed into law on December 27, 2020. 5/3/2021 Dana Fried. Under the new legislation, the SBA is getting over $284 billion in funding for first and second-time PPP loan borrowers. Most of the money is already gone. Small Business Administration. 133: Consolidated Appropriations Act, 2021 into law on Dec. 27, 2020. If youre a seasonal business, you can count your average monthly payroll costs from any 12-week period of your choosing between February 15, 2019 and February 15, 2020. "SBA Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on Tuesday, January 19.". The program was expanded in president Joe Bidens American Rescue Plan. 815 N. 4th St, Ste C . Over the three rounds of PPP loans issued between 2020 and 2021, the SBA disbursed $790,765,202,677 in funding. There are a couple important caveats that second time borrowers should be aware of: 1) If you received a Shuttered Venue Operator Grant, you wont be eligible for the second PPP draw and 2) If your business has multiple locations, you cant employ more than 300 employees per location to be eligible. Finally, businesses that received PPP loans were not eligible to also take the Employee Retention Tax Credit. Check out all our open positions here, Lets talk about what sets Funding Circle apart, by the numbers, Get in touch with us, no matter where you are, Check out our latest headlines & media releases, Learn about our small business loans, growth & operations and more, Get answers to frequently asked questions about your PPP loan, Learn all about about Funding Circle: who we are, what we do, and more, Profiles, case studies & more on how we empower our borrowers successes. Just like with the original PPP loans, you cannot count your PPP loan forgiveness amount as part of your businesss gross income. While certain loans are now eligible for the EZ loan forgiveness application, there's greater interest in easing . . The starting date for a 14-day period, ordered by the Biden administration, during which only businesses with fewer than 20 employees could apply for a PPP loan. Market Realist is a registered trademark. Recipients have up to Mar.11, 2023, to use the funds, and they dont have to pay the money back as long as they use it for eligible purposes. "Office of Chief Counsel Revenue Service Memorandum. An additional $1 billion was allocated for these individuals in low-and moderate-income (LMI) areas. Please enter valid email address to continue. The same legislation that authorized the third round of direct payments in March . The newer Act extended the availability of . The survey of 1,293 Goldman Sachs 10,000 Small Businesses participants conducted Feb. 15-16 found that 66% of small businesses qualified for a second PPP loan and 83% of those who qualified have applied for a second PPP loan. The tax credit is available in Q1 and Q2 of 2021 and is both refundable, meaning the IRS will send employers checks, and advanceable, meaning employers can apply for the credit in advance of paying their employees. Congress recently passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, in part to reauthorize the Paycheck Protection Program (PPP) that ended in August 2020. Following guidance from the U.S. Small Business Administration (SBA) and Treasury Department, community financial institutions including Community Development Financial Institutions (CDFIs) began making first-draw PPP loans on Mon., Jan. 11, and second-draw loans on Wed., Jan. 13. As with round one, borrowers must still attempt to keep their head count intact to the extent possible. As with a first-time PPP2 borrower, you have to spend no less than 60% of your total loan amount on payroll costs. For most borrowers, the maximum loan amount of a Second Draw PPP loan is 2.5x the average monthly 2019 or 2020 payroll costs up to $2 million. The rules also now do not require borrowers to deduct any grants they received if they applied for the SBAs other loan program, the Economic Injury Disaster Loans (EIDL). It is important to note that the main activity of a business must be live entertainment, so a restaurant that provides a nightly singer, for example, would not be eligible. Now businesses are able to get PPP loans and avail themselves of the tax credit, providing they can show a reduction of revenue of 25% or more in a quarter of 2020 over 2019. Borrowers of loans in excess of $150,000 will have to document their reduction in gross receipts upon applying for round two of PPP. Applications for the final round of PPP loans will be accepted only until Monday or until the remaining funds are drained, whichever is sooner. Further, with the new Biden Administration being sworn in January 20, 2021, and a Democratically controlled Senate and House, new regulations and relief packages are on the horizon. They do not purport to reflect the views or opinions of Funding Circle. This comes as only about half of the $800 billion in so-called PPP distributed amid the pandemic has been forgiven so far. Businesses were required to certify that pandemic-related economic uncertainty made the loan request necessary to support ongoing operations and that funds would be used as required. Guide to COVID-19 Personal Finance Assistance, How SBA Loans Can Help Your Small Business, How to Navigate the Latest Small Business Relief Plan and Get a PPP Loan, The End of the Employee Retention Credit: How Employers Should Proceed, How and Where to Get COVID-19 Financial Help, Applying for a COVID-19 Economic Injury Disaster Loan (EIDL) by the Dec. 31 Deadline. PPP Second Draw Loans - These "second draw" loans are targeted at hard-hit businesses that employ 300 or fewer employees and that have used or will use the full amount of their first PPP loan. On Monday, December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA), which contains a $900 billion COVID-19 Round three funding of $284 billion expanded on the original PPP goals of providing loans to businesses for payroll and other costs to help them remain viable and allow their workers to pay their bills; however, those funds were depleted, and as of May 31, 2021, the PPP program was no longer available. If not, quarterly financial or bank statements may suffice. For a First Draw PPP Loan, that certification means that the borrower has no more than 500 employees, is a small business concern as defined in section 3 of the Small Business Act (15 U.S.C. The Paycheck Protection Program is back with new eligibility requirements and terms. The IRS is encouraging anyone to whom this guidance applies to, if necessary, file an amended return. Phaseouts for this round of stimulus is tighter than the last as part of a congressional compromise - single taxpayers will begin to phase out at $75,000 of AGI and will be completely phased out at $80,000. We do believe that that program is done, other than the forgiveness, which we can talk about it in a minute. Married filing joint phaseout begins at $150,000 and ends at $160,000. Now, to offset these losses and help a greater number of small businesses recover, Congress is amending a handful of terms and requirements around PPP loans. Note: On January 19, the PPP was opened to all lenders. Vance's (R-Ohio) call for a Paycheck Protection Program (PPP)-style plan to help workers and businesses affected by the East Palestine train derailment is being greeted skeptically All SBA 7(a) lenders were approved to accept first and second draw applications starting on Tues., Jan. 19, 2021. That means about $68. Second-draw applications began on Wed., Jan. 13. $15 billion for lending by insured depository institutions, $35 billion for new first-draw PPP borrowers, $15 billion and $25 billion for first-draw and second-draw PPP loans for borrowers with 10 employees or fewer, or for loans of less than $250,000 to borrowers in low-or moderate-income neighborhoods. Employee Retention Credit (ERC) now available for all of 2021, and PPP loan recipients can claim ERCs. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Non-citizens who were lawful U.S. residents were also eligible and allowed to use their Individual Taxpayer Identification Numbers (ITINs) to apply. In the meantime, the Economic Aid Act and new regulations improve PPP and expand it to those businesses that need it most. During round 1 of the paycheck protection program, Arden Group, LLC requested a PPP loan for $234,800.00. ", Small Business Administration. Congress has also updated other aspects of the PPP, including the following: Under the original Paycheck Protection Program, business owners could get their loans partially or fully forgiven if they spent their funds on payroll costs, utilities, rent, and mortgage interest payments. 94 9.7K views 1 year ago UNITED STATES So if you're waiting for PPP loan round 4 and want to know when you'll get a chance to fill out new PPP application, then watch this quick update to. "SBA Paycheck Protection Program (PPP) Loan Forgiveness: In Brief," Page 5. 504 loans, long-term, fixed-rate financing to purchase or repair real estate, equipment, machinery, or other assets., 7(a) loans, which guarantee portions of the total amount, cap interest rates, and limit fees.. $15 billion across first and second draw PPP loans for lending by community financial institutions; $15 billion across first and second draw PPP loans for lending by Insured Depository Institutions, Credit Unions, and Farm Credit System Institutions with consolidated assets of less than $10 billion; $35 billion for new first draw PPP borrowers; and. The loan was facillitated by First National Bank Of Central Texas. Further, this rule applied to new, existing, and previous PPP loans. The new PPP loans are largely subject to the same terms and conditions of the first round, including the following: Borrowers applying for a second round of PPP must also have used all of the first tranche of funds prior to or by the date of receiving new funds. It was created by the CARES Act and originally included $349 billion in funding; however, that money was gone within two weeks, resulting in the second round of funding totaling $310 billion. Under the stimulus relief bill, parents who make under $75,000 a year and have a child under 6 years of age will receive $3,600 through the child tax credit. The new round of PPP loans will be available to three categories of businesses: Every business that applies for a PPP loan needs to have been in operation since at least February 15, 2020 to be eligible. Half of the 2021 PPP loans have been fully or partially forgiven with payment at $106,612,577,916. According to the Small Business Administration, more than 600 banks have opted in to direct forgiveness so far, enabling more than 2 million borrowers to apply through the new portal. CBS News reporter covering economic policy. 2021 CBS Interactive Inc. All Rights Reserved. Proper Treatment of Improperly Forgiven PPP Loans, H.R. To apply for forgiveness if you receive a loan of $150,000 or less, you have to submit a one-page application to your lender that includes: The SBA has to create a simplified application form within 24 days of the bills enactment, and wont require any other materials from business owners unless theyre necessary to verify a businesss revenue loss. People may receive compensation for some links to products and services on this website. All Rights Reserved. You may opt-out by. Proper Treatment of Improperly Forgiven PPP Loans. Please note: the White House is working on expanding eligibility. The only exception is if your business has a NAICS code beginning in 72. But it still hasn't received 3.2 million applications out of the 5.3 million loans disbursed in . Up to 40% of your remaining funds can go toward rent, mortgage interest payments, utilities, and other covered costs, including operations expenditures, worker protection expenses, property damage costs, and supplier payments. Your Paycheck Protection Program (PPP) loan must be used for payroll, mortgage interest, rent expenses, or utilities. As of. Borrowers still have to use 60% of the funds on payroll and 40% on expenses over a 24-week period. On Feb. 22, 2021, the White House announced five changes to the Paycheck Protection Program (PPP). In addition, while first-time borrowers can have 500 or fewer employees as in round one of PPP, second-time applicants can only have a maximum of 300 employees. To get a second round of PPP funding, your business must have seen a 25% drop in revenue compared to 2019 and not have any more than 300 employees. The new regulations do give lenders the ability to request additional documentation from borrowers if they deem it necessary. The program has $2 billion in reserves specifically for venues with up to 50 full-time employees. The EIDL grant program did run out of money and the Economic Aid Act refunded the program to the tune of $40 billion. President Joseph R. Biden signed the American Rescue Plan, a $1.9 trillion stimulus package, into law on March 11, 2021, after Congress passed it. The new $900 billion coronavirus relief bill includes $284 billion in PPP funds, along with provisions to help minority-owned businesses get loans . Round three included special set-aside funding for specific groups of first- and second-draw borrowers. Round one and Round two PPP loans stipulated that the period during which a business had to use its loan proceeds (the covered period) was an eight-week period beginning on the date the business received its loan proceeds. These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. This also applies to seasonal businesses and those without 12 months of operating history. The Coronavirus Aid, Relief, and Economic Security (CARES) Act , which was signed into law by Donald Trump in 2020, authorized the U.S. Small Business Administration (SBA) to issue loans to large and small business owners under the Paycheck Protection Program (PPP). 266 - PPP and Health Care Enhancement Act, H.R. The loans are 100% guaranteed by the federal government; The interest rate will be 100 basis points or 1%, calculated on a non-compounding, non-adjustable basis; Loans will be processed by authorized lenders who will be permitted to rely on certifications of the borrowers to determine the borrowers eligibility and use of the loan proceeds. 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