April 7, 2021
Economic conditions continue to challenge businesses and nonprofits alike in 2021. Fortunately, there are still opportunities for organizations to take advantage of federal government programs for assistance. SBA and Treasury continue to issue new rules regarding eligibility and deadlines, but organizations should be vigilant if they plan to take advantage of these programs.
Paycheck Protection Program (PPP) in 2021
With President Biden’s signature of the PPP Extension Act of 2021 on March 30, the deadline for application has been extended through May 31, 2021. The Small Business Administration (SBA) has until June 30 to process applications received by the deadline. Although the deadline was extended, SBA is warning that the funding may run out in mid- to late-April and some banks may stop accepting applications a couple of weeks in advance of this anticipated depletion.
Signed on March 11, the American Rescue Plan Act of 2021 (ARPA) added another $7.25B to the PPP. The Act also expanded eligibility to large nonprofits (those with 500+ employees) as well as some 501(c)(6) organizations and affiliated organizations. 501(c)(4) are not eligible for PPP loans.
The SBA did not initially permit second draw loan applications for borrowers who accepted their first PPP loan this year. A new SBA rule allows first draw borrowers to apply for a second draw loan if they can certify that funds from the first round have been or will be used by the time they receive their second round of PPP funding. As before, borrowers must demonstrate that gross receipts in any calendar quarter of 2020 were at least 25% lower than the same quarter of 2019.
Addressing concerns that the PPP is unfair to taxpayers who file the Form 1040 Schedule C, AICPA is calling on SBA and Treasury to make the rules issued March 3 retroactive. This would help sole proprietors who received a smaller amount of PPP funding due to the formula used to calculate loan amounts.
Shuttered Venue Operators Grant (SVOG)
Beginning April 8, SBA will be accepting applications for $16B in grants for venues in operation as of February 29, 2020. Funding is expected to be depleted quickly so applicants are encouraged to complete the preliminary application checklist available on the SBA website and apply on the day of release. SVOG grantees are also eligible for the PPP but they cannot “double-dip” and use the funding for the same expenses.
Employee Retention Tax Credit (ERC) Extended
As noted in GRF’s January 26th industry alert, the ERC was extended to June 30, 2021 by the Consolidated Appropriations Act of 2021 (CAA). ARPA further extends the ERC to December 31, 2021, thereby allowing eligible taxpayers to claim the credit for the third and fourth quarters of this year. The extension also allows new businesses established after February 15, 2020 to qualify for the credit as long as gross receipts do not exceed $1M. As before, employers who received PPP funds may also claim ERC credit as long as the same wages are not used to qualify for these programs.
Employers with questions about the PPP or eligibility for the ERC should contact their CPA for assistance. GRF CPAs & Advisors’ COVID-19 Response Team will continue to provide updates as information becomes available. Resources are available to the general public through GRF’s COVID-19 Response page. For questions about the PPP, ERC and other relief provisions, contact us at firstname.lastname@example.org.