By James Pruitt, Senior Staff Writer

  • What is the Small Business Administration (SBA)?

The Small Business Administration known as the SBA runs the stimulus programs relevant to small businesses, including the loans under the Paycheck Protection Plan. Generally, financial institutions administer the loans. The mission of the Small Business Administration is “to maintain and strengthen the nation’s economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters.” The SBA has offices in each state. Contact your local office for information about PPP loans and pandemic assistance.

  • What are Payment Protection Loans?

Payment Protection loans are forgivable loans under the CARES Act, signed by the former President on March 27, 2020. The Small Business Administration primarily intends the loans to ensure that smaller businesses meet payroll.   President Biden is opening a new round of PPP Loans.

  • Criteria for Small Business Loans under the Second Draw Paycheck Protection Plan:

Second Draw PPP Loans started with the second act on January 13, 2021 for select businesses who were original PPP recipients. These businesses must have exhausted their original funds from a first draw loan.

The criteria are the following: (1) money is going to small businesses, defined as having fewer than 300 employees per location. These businesses must (2) have been specifically affected by the pandemic, and (3) must have lost 25% in revenue in any quarter of this year compared to last year.

  • Forgiveness Simplified:

Forgivable expenses now include (1) supplier costs, (2) operations expenditures for everyday functioning, (3) property damage from public disturbances, and (4) safety expenditures. When you apply for forgiveness of the PPP loan, any expenses are tax-deductible.

  • Support for Minority-Owned Businesses and Depressed or Rural Communities:

Businesses in Low to Moderate (LMI) income areas may qualify for additional support. The latest CARES act has set aside $15 billion for initial PPP loans and $25 billion for second PPP loans.

Credit unions and other financial institutions may qualify. Other eligible recipients include small agricultural credit unions, minority depository institutions, certified development companies (CDCs), and community development financial institutions (CDFIs), as well as groups that administer SBA Microloans.

  • Seasonal Employers:

The SBA now defines seasonable employers as those that (1) operate for no more than seven months of the year, or (2) earned no more than 1/3 of their revenue in any six months in the prior calendar. Seasonal employers have different eligibility and forgiveness criteria.

7) Employee-Retention Tax Credit:

The “Employee Retention Tax Credit” Induces employers to maintain payrolls. The new bill expands benefits from employers with 500 or fewer employees to those with 100 or fewer employees.

These businesses may use the credit based on wages from the same quarter in a previous year.  New employers may claim the credit even if they formed in 2019 or early 2020. There is also help managing health plan expenses. Further, the new bill removes the 30-day wage limitation, and even allows certain public organizations to claim the credit.

8) Deferral of Social Security Taxes:

Employers’ social security taxes are deferable for eligible businesses. The new CARES Act relieves those taxes through March 2021, and repayment may extend until late 2022.

9) EIDL Program:

The new wave of PPP loans does not preclude Economic Injury Disaster Loans. Small businesses may receive both. The main caveat is that the SBA now has more power to detect fraud. Also, proprietors need not deduct the EIDL grant from the PPP forgiveness amount. Emphasis remains on employee retention, with $1000 per employee grants still available.

10) Additional benefits for nonprofits:

Individual taxpayers can deduct even more for charitable giving. Nonprofits should emphasize this benefit when soliciting donations. The “above-the-line” charitable contribution is now $600 for joint filers, and $300 for others.

11) Shuttered Venue Operator Grant Program:

The pandemic has direly affected arts and entertainment venues. A grants program supports these businesses under the new legislation. Businesses that receive such grants will not receive PPP loans. The new program provides grants to entities with 70 percent or greater loss in revenue. These businesses include museum operators, those involved with the performing arts, and talent agencies.

12) Exemptions:

There are certain exemptions for PPP loans under the new round of CARES legislation. Examples may include entities that receive a grant under the Shuttered Venue Operator Grant Program (such as above), businesses affiliated with the People’s Republic of China, registrants under the Foreign Agents Registration Act, and political or lobbying organizations.

 

We hope that this article has been helpful.   We work hard to bring you important, helpful and timely information and are the “go to” online venue for Veteran and Military Business Owners.  VAMBOA, the Veteran and Military Business Owners Association is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA