We hope everyone is doing well as we wind down the crazy 2020. Wanted to give you a very high level overview of the bill in Congress. This is the first take on it, and as we all know many clarifications will come. Please visit our website for previous articles on several of the below subjects as most of this is a continuation of the Cares Act. Here we go.
- $600/person advance credit plus $600/child – this works same as last time, but based solely on 2019 AGI, same phase outs from last time - they expect these to go out in the coming weeks
- $300/week Pandemic unemployment extended through 3/14/2021
- FFCRA extended through 3/31/2021 - this helps provide pay for employees who were off because of Covid-19, had to care for a family member or had a child home from school/daycare
- EDIL Grant and PPP forgiveness not taxable and expenses are NOT reduced - this will be a tax free transaction
- PPP Forgiveness - $150K or less there will be a form provided within 24 days of the passing of this bill where they simply attest the # of employees retained, estimated amount spent on payroll & total loan. They keep documentation internally, nothing provided to bank. Must keep documentation for 4-years
- Original PPP loans that were not calculated correctly can amend their application to receive additional funds
- Farmers loan is based on gross receipts, not net profit – max loan $20,833 for sole prop
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Qualify if 1st, 2nd, 3rd or 4th Q gross receipts in 2020 dropped 25% of more compared with the same quarter in 2019. Must compare quarter with same quarter. If dropped in any one quarter, business qualifies for Round 2
- Calculation is the same 2.5 times average monthly payroll from 2019 or prior 12-month period before the loan. Payroll costs definition are same as previous – emphasis to add group health, dental, vision, GROUP policy. Loan not to exceed $2M
- If NAICCS code begins with 72 (Food & Hospitality) the loan is 3.5 times the average payroll cost
- Loans up to $150,000 will attest to revenue reduction, but will need to provide documentation prior to forgiveness. Loans greater than, guidance to come on what will need to be provided
- Covered costs – payroll, mortgage interest, rent, utilities – NEW covered operating exp, damages not covered by insurance, supplier costs, & worker protection – guidance to be provided on exact meaning of this. 60% most be used on payroll
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Appears can elect 8 or 24 week use period for round 2 loans. Covered period ends 3/31/2021, so must apply prior
- EIDL Grant - they are opening this back up and if you did not previously apply, we do suggest you do since they removed the reduction of the PPP in this bill
- Anyone with 7(a) SBA loans will have those loans paid for 3 months beginning 2/1/2021 - cap is $9,000/month
- Meals will be 100% deductible in 2021 & 2022
The more we learn, we will pass along.
