What Is the Employer Payroll Tax Deferral Provision? Draw PPP Loans. 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. The first type was initial or first-draw loans up to $10 million for entities that had never received a PPP loan. The New York Times. Opinions expressed by Forbes Contributors are their own. Congress has approved three waves of stimulus payments during. 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. The program which ran from April to August 2020 initially allotted $349 billion in funding to small businesses, then injected another $320 billion to help satisfy the high demand of applicants. "PPP Loan Forgiveness.". The following costs do not count as payroll: To qualify for full loan forgiveness, you need to spend no less than 60% of your total loan amount on payroll costs. The maximum loan amount you can receive is $10 million. Proper Treatment of Improperly Forgiven PPP Loans, H.R. The seventh batch of direct stimulus payments worth over $4.3 billion included an additional 2 million payments . The Consolidated Appropriations Act of 2021 (CAA) was signed into law on Dec. 27, 2020 and included new funding for the Paycheck Protection Program (PPP), which expired on Aug. 8, 2020. Aside from shutting out the larger firms, the Treasury Department announced Monday that it will permanently change the loan calculation formula it applies to independent contractors such as Uber. Borrowers of loans in excess of $150,000 will have to document their reduction in gross receipts upon applying for round two of PPP. 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. "Paycheck Protection Program Borrower Application Form Revised January 8, 2021. The American Rescue Plan, which was passed in March, added another $7.25 billion to the program. 266 - PPP and Health Care Enhancement Act, H.R. Businesses can receive up to 24 months of relief and a maximum loan of $500,000. Just like with the original PPP loans, you cannot count your PPP loan forgiveness amount as part of your businesss gross income. The claim that a fourth stimulus payment worth $2,000 per person will arrive by Memorial Day weekend is FALSE, based on our research. If you receive a loan of $150,000 or less, you can submit a one-page document to your lender as part of the simplified forgiveness application. Congress later provided an additional $320 billion for the PPP in H.R.266, the Paycheck Protection Program and Health Care Enhancement Act (Round Two). $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. Staggering snowfall in California mountains leaves residents trapped for days, SpaceX launches new crew to space station, Prosecution wraps case at Alex Murdaugh murder trial, White House cybersecurity strategy pivots to regulation, Explosive found in checked luggage at Pennsylvania airport, feds say, Rape kits from two women lead to arrest in 1979 murder of one of them, FDA authorizes first at-home test for both COVID and flu, Couple accuses fertility clinic of implanting embryo with cancer genes, Several hospitalized after Lufthansa flight diverted to Dulles due to turbulence, Black-owned businesses face obstacles with Paycheck Protection Program, Biden updating Paycheck Protection Program to aid small businesses, FBI chief says agency feels pandemic likely started with Chinese lab leak. The Board's rule extension will allow those individuals to apply for PPP loans, consistent with SBA's rules and restrictions. On the other hand, if your loan amount is greater than $150,000, youll have to apply for forgiveness the way you did last time. They were approved on 6/5/2020 by the SBA for an amount of $156,400.00. Using an alternative lender may be simpler and faster. In addition, the Economic Aid Act expanded the list of expenses from the original short list of rent, utilities, mortgages, and interest on existing debt, to include essential supplier costs, personal protection equipment, and operational expenses such as software, accounting, and cloud computing. Sources: U.S. Congress; Congressional Research Service. Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020. The direct portal, which will open for applications starting August 4, will be available for businesses that had PPP loans of $150,000 or less. Lantern by SoFi. If you werent in business during Q1, Q2, or Q3 of 2019, but were in business during Q4, you can compare any quarter in 2020 with Q4 of 2019 to determine where your gross receipts dropped by at least 25%. The views and opinions expressed in this article are solely those of the author writing in her individual capacity. The new $900 billion coronavirus relief bill includes $284 billion in PPP funds, along with provisions to help minority-owned businesses get loans . Rep. Blaine Luetkemeyer (R-Mo. One change had a set term of two weeks. 815 N. 4th St, Ste C . Of that, $680,813,821,189 was asked to be forgiven. The Economic Aid Act also expanded the list of businesses that are now eligible to receive PPP loans. The CAA provided for two types of round three PPP loans. Between 2020 and 2021, the SBA issued 11,444,981 PPP loans to business owners and the self-employed. The bill introduced by Senate Small Business Chair Ben Cardin (D-Md.) "This initiative will allow PPP borrowers to put their concerns of achieving full forgiveness behind them and focus on operating and growing their businesses again," said Patrick Kelley, associate administrator for SBA's Office of Capital Access. Yes! 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. Employee Retention Credit (ERC) now available for all of 2021, and PPP loan recipients can claim ERCs. Large banks were inundated with PPP loan applications during the first round, and many didnt have the time or bandwidth to respond to everyone who applied. Copyright 2023 Market Realist. "H.R.1799 - PPP Extension Act of 2021: Summary. No. In addition to launching its direct forgiveness portal, the Small Business Administration said it is setting up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. All loan offers and qualifications require credit approval and are subject to change with or without notice. The main takeaway is that any business that did not receive a PPP loan previously, or those businesses that experienced a 25% reduction in revenue in one quarter of 2020 over 2019, can apply for this new round of PPP. 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. You need to have proof you spent your funds correctly in case you get audited. Congressional Research Service. Issued as part of the CARES Act in March 2020, the PPP gave small businesses and independent contractors loans to cover payroll costs for a period of up to eight weeks. The maximum loan under this program is $2 million, based on two and a half months of average annual payroll (three and a half months for NAICS Code . New first- and second-draw loans followed a pattern similar to that followed with previous PPP loans. The bill also states that $20 billion will be set aside to provide Economic Injury Disaster Loan (EIDL) grants to businesses in low-income communities. Copyright 2023 Funding Circle Limited. Here are the new areas you can allocate PPP loan funds to: Under PPP2, youre eligible for full loan forgiveness as long as you spend at least 60% of your loan amount on payroll costs. Here are a few key facts about the first round of PPP loans: Though the program helped countless small businesses stay afloat amid COVID-19 shutdowns and restrictions, the Paycheck Protection Program wasnt a cure-all for the small business economy. Unlike other SBA loans, PPP loans are designed to be partially or fully forgivable, meaning you wont have to pay them back as long as you follow certain rules. 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 loan was facillitated by First National Bank Of Central Texas. The newer Act extended the availability of . ", Small Business Administration. "Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans," Page 6. Hospitality or food service businesses with a NAICS code beginning in 72 may receive up to 3.5 times their average monthly payroll costs. 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. Businesses couldn't receive a second-draw loan of up to $2 million unless they met the following conditions: Round 3 guidelines excluded businesses from a second-draw loan if a company was: On March 30, 2021, the Paycheck Protection Program Extension Act was signed into law, which gave applicants until May 31, 2021, to apply for a PPP loan, extended the covered period to June 30, 2021, and gave lenders until that date to process loans. The Paycheck Protection Program ended May 31, 2021 after all funding was exhausted. A hot topic for the second round of the PPP is loan forgiveness. 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. 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