Coronavirus Updates & Resources

U.S. Small Business Administration Loan Programs

The U.S. Small Business Administration (SBA) offers a number of programs to help support small businesses—from counseling to making loans. Several new SBA initiatives have now been developed to help businesses address the Coronavirus challenges. Specifically, the SBA 7(a) loan program has been expanded to include Paycheck Protection Program loans and a new SBA Coronavirus disaster loan program has been created.

Paycheck Protection Program (PPP)

• The PPP loan program ended on May 31, 2021, having provided nearly $800 billion in loans to over 8.5 million small businesses and nonprofit entities. Those same companies and nonprofits may now seek loan forgiveness for funds spent on payroll, rent, and other eligible necessities.
• Covered Period: Funds for potentially forgivable expenses must be spent during the Covered Period. Borrowers can set the “Covered Period” of the loan to be between 8 and 24 weeks after the loan disbursement date.
• Use of Funds: PPP funds can be used to cover payroll, mortgage interest, rent, utilities, expenditures related to software and cloud computing services, certain property damage costs, certain supplier costs, and certain worker protection expenditures. At least 60% of loan proceeds must be used on payroll costs (i.e., wages, payroll taxes, paid leave, healthcare payments, retirement plan contributions, and group life, disability, dental, and vision insurance). Reimbursable compensation in the form of salaries, wages, commissions or similar payments is capped at $100,000 per employee.
• Interest Rate and Repayment Terms: The loan interest rate is 1% for five years. Repayments on any amount not forgiven is deferred at least 10 months after the end of the Covered Period. No collateral or personal guarantees are required and there are no borrower and lender fees.
• Taxable Income: Forgiveness of PPP loans is not to be included as taxable income (federal) but check how your state will treat the loan.
• Tax-Deductible PPP Expenses: PPP loan proceeds are tax-deductible as business expenses (federal) but check how your state will treat the expenses.
• Amount Forgiven: The SBA will forgive up to 100% of the loan principal if the funds have been used appropriately (for payroll, rent, utilities, etc.).
• Streamlined Loan Forgiveness Application: The SBA will now have a simple, one-page form to seek forgiveness of a loan of $150,000 that does not require any submission of documentation. The borrower must simply certify to the following: the number of employees the borrower was able to retain because of the loan; the estimated total amount of the loan spent on payroll costs; and the total loan amount. The borrower must attest that the loan was spent on eligible expenses and that the borrower will retain records that prove compliance with PPP requirements. Employment records must be retained for four years and other records must be retained for three years. (The borrower remains subject to an audit.)
• Receiving PPP Funds: Once a borrower receives a Preferred Lender Program (PLP) number for its loan, the loan is approved by the SBA, and funds are reserved for the borrower. Starting on the date a borrower receives a PLP number, the lender has 10 calendar days to disburse funds. The loan must be disbursed in full, and the 24-week loan forgiveness period begins the day funds are disbursed.
• Employee Retention Tax Credit (ERTC) or PPP Loan Forgiveness? See ERTC below. Before filing a loan forgiveness application, companies are advised to consider whether they will gain more benefits by claiming the tax credit and paying the 1% PPP loan. A choice must be made since you can’t use the same payroll dollars to apply for PPP forgiveness and to apply for the ERTC.

Coronavirus Disaster Loan Program

• The SBA established an economic injury disaster loan (EIDL) program with low-interest loans for small businesses and non-profits (3.75% and 2.75% respectively) that have been severely impacted by COVID-19. EIDL loans are once again available through the most recent COVID-relief law and the application period has been extended to December 31, 2021. The SBA’s Coronavirus Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $150,000 to help overcome temporary revenue loss. Loans may be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. To be eligible for the loan, borrowers must provide collateral for loans over $25,000. Collateral can be machinery and equipment, furniture and fixtures, and other things. [Note: The SBA previously provided a loan advance of up to $10,000 which automatically became a forgivable grant. EIDL advances are no longer available at this time.]

America’s Small Business Development Centers (SBDCs)

America’s SBDC represents the national network of Small Business Development Centers (SBDCs) that are hosted by leading universities, colleges, state economic development agencies and private partners, and funded in part by the U.S. Congress through a partnership with the U.S. Small Business Administration. Small business owners can go to their local SBDC for FREE face-to-face business consulting and at-cost training on a variety of topics.

There are nearly 1,000 local centers available to help your company identify the best game plan to address COVID-19. For example, this might include taking out a SBA disaster loan to help pay rent and other obligations before taking out a PPP loan for payroll when operations resume. Click here for more information:

• SBDC Coronavirus Information
• Comparison of Five SBA Loan Programs
• SBDC Locator

Employee Retention Tax Credit

Companies are urged to take advantage of a COVID-19 economic relief program enacted in 2020 and expanded in 2021, the Employee Retention Tax Credit (ERTC). The ERTC is meant to help employers that suffer significant financial losses or that were fully or partially closed due to a government order but continue to pay workers who are unable to perform their duties.

• 2020: The tax credit is equal to 50% of up to $10,000 in qualified wages paid between March 12-Dec. 31, 2020. The total credit is capped at $5,000 per employee and applies against employment taxes on wages paid to all employees. There is a 100-employee limitation. Credit available if:
  • Employer had a fully or partially suspended operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority due to COVID-19; or
  • Employer experienced a significant decline (more than 50%) in gross receipts during the calendar quarter.
• 2021: The tax credit applies to the first three quarters of 2021. The credit is now equal to 70% of up to $10,000 in qualified wages per quarter (including health plan expenses). This means the tax credit is potentially $21,000 per employee ($7,000 for each quarter). Employers who have experienced a 20% or more decline of gross receipts in a quarter compared to the same quarter in 2019 can apply. For 2021, the size limitation was increased to employers with 500 or fewer employees (up from 100 workers).

Employers claim the ERTC by withholding payroll taxes for qualified employee wages. Because the tax credit is refundable, if the withholdings do not cover the entire tax credit, the IRS will send you a check for the remaining amount.

Under the expanded ERTC program, a business that obtained a PPP loan can claim the ERTC provided that wages paid with PPP funds are excluded for the purpose of calculating the ERTC.

The IRS issued new guidance for employers on the rules that will apply to the ERTC for the first two quarters of 2021: https://www.irs.gov/pub/irs-drop/n-21-23.pdf

Additional IRS coronavirus relief information is available at: https://www.irs.gov/coronavirus/coronavirus-tax-relief-for-businesses-and-tax-exempt-entities