Small businesses have been severely impacted by curfews, restrictions on in-person interactions, new expenses for sanitization and many more things as a result of the pandemic. There has been government assistance available to support small businesses and just last week there was another federal assistance program approved to provide support. If you are like most small businesses, the assistance could help your business yet you may not be sure what you qualify for or know how to get it.

In an effort to help small businesses understand the bill and how it may apply to their business, below are a few areas of support that the new bill provides. Though the SBA has not yet rolled out the loans, this information will assist you in planning your strategy and looking at your numbers to apply to the respective areas. 

Employee Retention Tax Credit

The Employee Retention Tax Credit is a refundable, advanceable tax credit up to $14,000 per employee. It is important for small businesses to work with their payroll company or small business accounting firm for guidance on this.  The business qualifications include the following:

• Businesses with 500 or fewer employees

• More than 20% decline of gross receipts in a quarter compared to 2019

• Small businesses are required to file the form with the IRS to get Employee Retention Tax Credit. 

• The maximum credit of $14,000 is maximum credit which goes against payroll taxes for small businesses

• Small businesses can take advantage of this starting in January

The Second Draw PPP Loan

The Second Draw PPP Loan is forgivable up to $2 million for small businesses with 300 or fewer employees that have exhausted their first PPP loan. Small businesses will need to prove a 25% or greater reduction in receipts in a quarter compared to 2019 to qualify. Additionally, the original PPP from last year is also reopened to those who have not received a PPP loan yet. A few pieces of important information about PPP loans are listed below:

• This original PPP loan is now not taxable

• Any expenses you paid with PPP loans remain deductible

• For the PPP loan, there have been some additional expenses that are now included such as plexiglass, partitions, essential supplier goods for your business

• There continues to be the 60/40 rule for small businesses where 60% must be related to payroll

• Non-profits that are 501 c (6) status now qualify for the PPP loan

• The loan is limited to employees with annual salaries of $100,000 or less

• Self-employed and independent contractors qualify for the PPP loan

• PPP does not use FTE (Full-time equivalent)

• Small businesses do not have to use the same lender for the second PPP loan, but the original lender has all your original information which might make the process easier.

EIDL Grant

The EIDL Grant allows small businesses to receive up to $10,000. Priority will be given to small business employers with 300 or fewer employees. Small businesses can reapply for the EIDL loan if they did not receive the full amount last year. Additionally, priority is given to small businesses in economically challenged neighborhoods. In order for a small business to qualify they will need to show a 30% reduction in gross receipts for an 8-week period between 3/2/20 and 12/31/20 when compared to a similar period. For additional information on determining if your small business qualifies for the EIDL Grant or help to file for this, contact JLP’s small business accounting team who is here to help.

Live Venue Grant

The Live Venue Grant is a grant of $10 million or 45% of 2019 gross earned revenue, whichever is less.  Qualifications include a live venue operator or promoter, theatrical production, or live performing arts organization operator, a museum operator, a motion picture theatre operator, or a talent representative who has experienced at least a 25% reduction in gross earned income. The grants must be used for specified expenses such as payroll costs, rent, utilities, and personal protective equipment. For Live Venue Grants, you can go directly to SBA to apply. 

In conclusion, there are several components to the new relief program and being informed is half the battle for small businesses. For more information and details around these relief options, the US Chamber of Commerce has more detailed information around each of these. The small business team at JLP CPAs is here to help you evaluate your options as well as apply for the applicable relief options that fit your business. Contact our team today to get started or learn more about COVID-19 resources we have put together for small businesses.