As we mentioned in our email last week, the latest round of stimulus action contains many items that may be especially applicable and exciting for our clients. The President has now signed the bill into law, so here is a rundown of some of the items to watch for and consider in the coming weeks:
- Simplified application process for PPP loans under $150k – while this streamlined application has not been finalized yet, it could be as simple as submitting a certification to the lender (no longer than one page) that details the estimated spend on payroll, how many employees the PPP funds allowed you to retain, and attestation that compliance was maintained. Recipients still have 10 months following the forgiveness period to apply, but this should make it less daunting!
- Expenses that were used for PPP forgiveness are still tax deductible and forgiven PPP loans will be treated as tax-exempt income.
- Deferral of employer Social Security Taxes has been extended through March 2021. Repayment terms remain the same with 50% due at 12/31/2021 and the remaining 50% due 12/31/2022.
- EIDL loans are still available through the SBA for all of 2021 and $20 billion more has been allocated to the program. The EIDL loans are long-term (30 year) loans with a fixed interest rate of 3.75%. The $1k per employee grant is still available, however, these are no longer deductible from the PPP forgiveness amount.
- Forgivable expenses under the PPP loan have been expanded. Previously, the PPP forgivable expenses just included payroll, payroll-related expenses, rent, utilities, and mortgage interest. While those all still apply, a few other expense categories have been added:
- Operational Expenses: Software, cloud computing, and HR and accounting needs
- Property damage from public disturbances that were not covered by insurance
- Supplier costs that are essential to business operations
- Personal protective equipment for workers and adaptive investments to help comply with health and safety guidelines
- The Employee Retention Credit has been extended through 7/1/2021. After year end, the following changes are effective:
- The credit has increased from 50% - 70%
- The limit per employee has increased from $10k for the year to $10k per quarter
- “Large Employer” classification was 100 employees, now has been increased to 500 employees
- Employers that received the PPP loan may still qualify for the credit, with respect to wages that are not paid with forgiven PPP proceeds
- Another round of PPP funding is coming! Businesses could receive a second round of PPP funds in the amount of 2.5x payroll and payroll costs for the period chosen. You are eligible for additional funding if you meet the below criteria:
- Less than 300 employees
- Revenue declines of more than 25% in any quarter of 2020 compared to the same quarter in 2019
- Extinguished first round of PPP funding received
As has been the theme this year, more details related to these items will be coming over the next few weeks. All of us at Fine Point are watching these developments closely as we prepare to help you, our clients, navigate these new items and maximize the relief available to you.
Please reach out to us with any specific questions or ideas for your company today,
and be sure to keep an eye out for more of these important updates from Fine Point!