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PPP Loans and Other COVID-19 Business Relief
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In the wake of the COVID-19 pandemic, Congress provided a financial life raft for struggling small businesses in the form of several federal loan programs. Much of that funding went toward Paycheck Protection Program (PPP) loans and other COVID-19 business relief. Although some of the programs have since ended or are no longer accepting new applications, there are still some opportunities available for small business owners.
Read below to learn the latest state of each program and whether you’re eligible to apply.
Status: Accepting new applications
The U.S. Small Business Administration first opened its disaster loan program to businesses affected by COVID-19 in March 2020. A COVID-19 Economic Injury Disaster Loan (EIDL) is good for up to $500,000 in working capital. The deadline to apply is Dec. 31, 2021.
COVID-19 EIDL at a glance:
- Rates: 3.75% for small businesses; 2.75% for nonprofits
- Terms: 30 years
- Amounts: Up to 24 months of working capital ($500,000 max)
- Payments: First payment is due 18 months from the date of your loan (24 months for loans made in 2020)
Status: Accepting new applications
A COVID-19 EIDL must be repaid, but one of its most attractive features is the Targeted EIDL Advance, a $10,000 grant which comes directly from the SBA. The American Rescue Plan Act added $15 billion to the Targeted EIDL Advance program, which is open to businesses:
- With 300 or fewer employees
- In a low-income community, as defined by the Internal Revenue Code
- Which have suffered an economic loss of 30% or more
Out of that $15 billion, $5 billion is set aside for smaller and harder-hit businesses, through the Supplemental Targeted Advance program — to be eligible, a company must have:
- 10 or fewer employees
- A base in a low-income community
- Suffered an economic loss of 50% of more
In particular, the Supplemental Targeted Advance program offers up to $5,000, but can be combined with another EIDL program. As such, these companies may be eligible for up to $15,000.
How to apply
Visit the SBA’s disaster loan portal to apply for additional COVID-19 EIDL funds if you’re already a recipient. The SBA sent out invitations in 2020 for the Targeted EIDL Advance, but you may also contact 800-659-2955 or [email protected] for more information. If you were rejected for an advance, you may request a reevaluation to [email protected] — include your 10-digit application number in the subject line and attach any documentation that addresses the reason for the decline.
Shuttered Venue Operators Grant (SVOG)
Status: Accepting new applications
Operators of theaters, museums, live performing arts organizations, independent movie theaters and other venues were eligible to apply for SBA grants of up to 45% of their 2019 gross earned revenue for a maximum of $10 million. SVOG money may be used for payroll, rent or mortgage payments, utilities, administrative costs and other business expenses.
Application priority will be given to businesses that suffered the greatest losses. Here’s the breakdown:
- First 14 days: Entities that suffered 90% or greater revenue loss between April and December 2020
- Next 14 days: Entities that suffered 70% or greater revenue loss between April and December 2020
- 28 days after first and second groups: Entities that suffered a 25% or greater revenue loss between one quarter of 2019 and the corresponding quarter of 2020
Restaurant Revitalization Fund (RRF)
Status: Closed to new applications
The American Rescue Plan created another new grant program, this one aimed at restaurant owners. Due to overwhelming response, though, the SBA is no longer accepting new applications. Restaurant owners were able to apply online or through their point-of-sale vendor (Square, Toast, Clover and others). They were eligible to receive the difference in their revenue — 2019 revenue minus 2020 revenue equals the eligible amount — up to $5 million per location ($10 million per restaurant group). Funds could be used for payroll, mortgage or rent payments, maintenance, supplies, food and other business expenses. You can learn more about the Restaurant Revitalization Fund here.
Both the RRF and SVOG may be used for expenses through the end of 2021 with the possibility of extensions.
Paycheck Protection Program (PPP) loans
Status: Closed to new applicants
Business owners were able to apply for a forgivable Paycheck Protection Program (PPP) loan until May 31, 2021. Whether you were a first-time borrower or returning for a second loan, the applications are now closed. The program helped 8.5 million businesses by offering $798 billion in relief.
First-draw PPP loans:
- Amounts up to $10 million
- Eligible businesses include sole proprietors, independent contractors and self-employed business owners, and any business or nonprofit organization that meets the SBA’s size standards
Second-draw PPP loans:
- Amounts up to $2 million (restaurant and hotel owners were eligible for larger loans)
- Eligible businesses with no more than 300 employees and can demonstrate a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
Regardless of which PPP loan you got, you may have been eligible for loan forgiveness if at least 60% of funds were used for payroll over the term of your choice, between eight to 24 weeks. The remaining amount, up to 40%, could be used for certain mortgage expenses, rent, utilities, personal protective equipment for you and your workers, supplier costs, operations expenditures and more.
If you didn’t qualify for forgiveness, you would have to repay the loan with interest:
- 1% interest rate
- Terms up to 5 years (2 years for loans issued before June 5, 2020)
Extended unemployment assistance
Status: Available through Sept. 6, 2021
The American Rescue Plan Act extended the Pandemic Unemployment Assistance program for those who lost wages as a result of COVID-19. The program opens up state-level unemployment benefits to those who are typically not eligible, including:
- Self-employed individuals
- Independent contractors
- Other workers who are ordinarily ineligible for unemployment benefits
Each recipient of unemployment insurance or Pandemic Unemployment Assistance will receive an additional $300 weekly up to Sept. 6, 2021, though some states have already stopped offering extended unemployment assistance.
How to apply
Each state runs its own unemployment insurance program that provides funds for people who lose their jobs through no fault of their own. You must meet your state’s individual eligibility requirements.
Visit CareerOneStop.org, a resource from the U.S. Department of Labor, to find state-by-state details about unemployment benefits and requirements.
Increased payroll tax credits
Congress extended — and tweaked — several tax credits for small business owners, who may claim:
- The costs of providing paid sick and family leave to their employees. Through Sept. 30, 2021, eligible employers could retain the amount of payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.
- 70% of the first $10,000 paid to each employee per quarter through the end of 2021. The Employee Retention Credit is now open to more employers, including start-up businesses.
Additional tax provisions include:
- Deferment of employment taxes: Employers can also defer payment of their share of Social Security tax through Dec. 31, 2021 (50% of the deferred amount).
- Modification of net operating losses (NOL): Unchanged in the most recent legislation, NOLs are typically subject to a taxable-income limit and may not be applied to previous years to reduce income. The Coronavirus Aid, Relief and Economic Security (CARES) Act of March 2020 allowed business owners to take NOLs from tax years 2018, 2019 and 2020 and carry those back five years to offset income and provide cash flow to use during the crisis.
- Reduced excise tax: A temporary reduction of excise tax for producers of beer, wine and distilled spirits is now permanent.
You can find more information about coronavirus tax relief on the IRS website.