We’ve written a lot about the PPP loans and tried to keep you abreast of what you need to know about them as new information was available. With the second round of loans running out, and forgiveness issues with the first round, we figured it was time to create another update.
First Round PPP Loans
According to the SBA, approximately 2.9 million of the 5.2 million PPP loans made in 2020 have been forgiven. That leaves a lot of business owners anxiously awaiting to hear their own fate.
There are a variety of reasons why this is the case, including not having the staff to process the applications in a timely way, confusion on how to apply, and the fact that banks often tend to focus more on the areas where they generate revenue and forgiveness isn’t one. While understandable to some extent, it doesn’t relieve any of the stress for nervous business owners waiting to hear if their loans will be forgiven.
For those that have yet to apply, you can access the one-page forgiveness application here, but this form can only be used if your PPP loan was for $150,000 or less. Ultimately, you need to contact your lender to see where they are in the process of your loan forgiveness since many lenders are way behind and experts estimate that it may be years before all loan forgiveness applications are processed.
Second Round PPP Loans
When the 2021 round of PPP loan funding was announced, we wrote about all the details here. It was scheduled to receive applications through May 31, 2021, but recently announced it had run out of money for most borrowers. Currently, the program is only accepting new applications from community financial institutions, which typically serve more women, minority and other underserved borrowers. According to the SBA, some money remains available for lenders to finish processing applications that have been received but not yet reviewed, but it is no longer accepting new applications.
Forgiveness applications for PPP2 loans are not available yet, and we don’t expect to see much on that topic until they get more of the initial round of forgiveness applications processed.
Other Assistance for Businesses
- Economic Injury Disaster Loans: This program existed before the pandemic, but Congress created new, low-cost, fixed interest rate options of EIDLs in response to COVID. Small businesses can apply to see if they qualify for EIDL loans with a fixed rate of 3.75% interest, while nonprofits receive loans at a fixed rate of 2.75%. These loans ARE NOT forgivable, and businesses can apply directly with the SBA.
- Employee Retention Tax Credit: Businesses that employ fewer than 500 people and experienced a decline in gross receipts by more than 20% in any quarter of 2020 compared to the same quarter in 2019 are eligible for the refundable tax credit. Worth up to $7,000 per employee per quarter, it can add up to a substantial amount of savings to help companies recover from the impacts of the pandemic.
- Expanded Family & Sick Leave: Again, for businesses that employ fewer than 500 people, employers can receive tax credits to cover the costs of emergency paid sick leave of up to $5,000 per employee for time taken before September 30, 2021.
- COBRA Healthcare Subsidies: Typically, employers are required to offer COBRA coverage to most former employees for up to 18 months, and the former employee must pay the total cost of the coverage without the employer subsidizing the cost. ARPA changed this so employers must subsidize COBRA coverage to eligible former employees from April 1-September 30, 2021. While employers will pay higher costs up front, ARPA also created advanceable, refundable tax credits to offset those costs.
While the help for small businesses has been appreciated, it has also created a great deal of questions for their owners. We are happy to help you in any way we can, so don’t hesitate to reach out with questions about your specific situation.