By: Tish Williams, Executive Director, Hancock Chamber of Commerce.
The Hancock Chamber staff attended a webinar today sponsored by the Mississippi Economic Development Council on the “COVID-19 New Relief Package” with the U. S. Chamber of Commerce. The webinar is available to view here. The PowerPoint can be downloaded here. This webinar had very helpful information for our small businesses, which includes the announcement that the SBA has reopened the Paycheck Protection Program (PPP) loan portal effective today for first draw PPP loan applications from participating CFIs. On Jan. 13, 2021, participating CFIs may begin submitting application information to SBA for second draw PPP loan applications. A few days following that, additional lenders will be able to submit First and Second draw PPP loan applications. Be prepared. Get with your lender now to make sure you are ready. Updated SBA PPP Lender forms, guidance, and resources are available at www.sba.gov/ppp.
From all of this, one of the most important things you can do this year is PAY ATTENTION TO THE EMPLOYEE RETENTION TAX CREDIT (ERTC) PROGRAM. This was available in the first-round stimulus package. You may remember you had to choose between the Paycheck Protection Program (PPP) and ERTC. Now the second-round stimulus is allowing you to do both. Effective January 1, 2021 businesses with 500 or few employees who had more than a 20% decline of gross receipts in a quarter compared to the same quarter in 2019 will qualify. It is a refundable and advanceable tax credit of up to $14,000 per employee (or $7,000 for the first quarter and $7,000 for the second quarter in 2021). It a new and more generous opportunity than the first round.
SECOND DRAW PPP LOAN – The second draw PPP loan is a forgivable loan of up to $2 million. It has all the similar features as first PPP. It is targeted to small businesses hit the hardest who have exhausted their first PPP loan. You have to have 300 or fewer employees (down from 500 for the first draw). You have to meet a revenue reduction test. Under the original PPP, it was just a simply attestation that your business was being harmed economically by the pandemic. Here you have to demonstrate that you had a reduction in gross receipts in a quarter in 2020 of 25% or greater compared to the same quarter in 2019. Your PPP loan forgiveness is now not taxable for first or second draws; and, the expenses remain deductible. The list of eligible expenses has now been expanded but 60% of your expenses still has to be for payroll.
TARGETED EIDL GRANT
You may recall that when the SBA Economic Injury Disaster Loan (EIDL) was first announced, businesses were supposed to be able to receive a targeted grant of $10,000. Many thought they were going to get the full $10,000 and did not because the money ran out. If you received a partial grant, you can apply again for the remaining portion of that $10,000 grant. It does not have to be repaid. You go straight to the SBA for this program. It is not up and running yet but we are told it will be in days and weeks. The SBA is giving priority to small businesses with 300 or fewer employees and for businesses located in a census track eligible for the new market tax credit.
LIVE VENUE GRANT
This is a grant of $10 million or 45% of 2019 gross earned revenue, whichever is less. This is open to a live venue operator or promoter, theatrical producer, or live performing arts organization operator, a museum operator, a motion picture theatre operator, or a talent representative who has experienced at least 25% reduction in gross earned income. It offers more funding than the PPP and is a direct grant versus a forgivable loan. SBA will administer the program so you do not go to your lender. We are told this application should be up and running in days or weeks. Get familiar with the program and get the application off the SBA website to begin the process. Like last time, this money will go fast.
The U. S. Chamber keeps us up to date with information to guide you through the processes. https://www.uschamber.com/report/guide-small-business-covid-19-emergency-loans#one
There are also fact sheets from the SBA:
First Draw PPP loan applications from participating CFIs open now.
On Jan. 13, 2021, participating CFIs may begin submitting application information to SBA for Second Draw PPP loans. A Second Draw PPP loan is for certain eligible borrowers that previously received a PPP loan, generally have 300 employees or less, and has suffered a 25% reduction in gross receipts.
A few days later, additional lenders will be able to submit First and Second draw PPP loan applications.