• The only update since the last time is that the SBA has still not released the new simplified forgiveness form for loans under $150,000. As a result, your banks may still be in a holding pattern on processing your forgiveness application.

• Tuesday, the SBA issued the necessary IFR's (which mean "Interim Final Rulings" - how's that for government double speak?).
• The SBA will start accepting PPP loan applications on Monday, January 11th for first draw loans (businesses that never got a PPP loan). Businesses eligible for 2nd draw PPP loans can apply on Wednesday, January 13th.
• However, to address some of the unfairness claims on the initial program, the SBA will only accept applications from what they are referring to as "community financial institutions" initially. The SBA will accept applications from all lenders after that although no specific dates have been given. It is still best to check with your bank directly on when they will accept applications.
• The last day to apply for PPP loans (1st or 2nd draws) will be March 31, 2021
• Eligibility for 2nd draw loans still requires you to have at least one quarter in 2020 that had a 25% decline in revenue when compared to the same quarter in 2019. However, the SBA also allows you to use full year revenue comparison (2020 vs 2019) if easier.
• 2nd draw loans over $150,000 will require supporting documentation (annual tax returns or quarterly financial statements) at time of loan application to prove 25% revenue decline. Loans under $150,000 do not require support at time of application but will require it before you apply for forgiveness of the 2nd draw loan. Don't be surprised if you bank asks for the support regardless of loan amount.
• Although PPP1 loans DO NOT have to be forgiven or paid back before an eligible business can take advantage of PPP2 2nd draw, you have to have either used all of the PPP1 funds or certify that you will do so.

• The ERC was another part of the initial CARES act that did not get much attention because if you took a PPP loan, you were not eligible to take advantage of the ERC. Also, the ERC is generally less advantageous than PPP.
• The new stimulus bill removed the PPP eligibility restriction so you can now take advantage of both programs if eligible (both retroactively as well as go forward through June 30, 2021)
• The SBA will be issuing additional IFR's on this program but here is what we know so far
• For 2020, the ERC is a credit on employer payroll taxes of up to $5,000 per employee per year (50% credit on up to $10,000 in annual compensation per W2 employee). The ERC is only eligible to business that had at least a 50% reduction in revenue when compared to the same quarter in 2019.
• For 2021, the ERC is extended to June 30, 2021 and the mechanics have changed. The credit will be up to $14,000 (70% of $10,000 in quarterly compensation for Q1/Q2 per W2 employee). Also, the revenue reduction eligibility is reduced to 25%
• Although you can now take advantage of PPP and ERC, you can't use the same payroll dollars for both. For example, if a W2 employee made $50,000 in 2020 and $30,000 of that was used as part of eligible PPP expenses forgiven, only the remaining $20,000 can be used for the ERC calculation.
• The AICPA will hold another town hall next week specifically on ERC to provide additional guidance. In the event there is an ability to claim this credit retroactively, we will work with those specific clients to amend any 941 filings as needed.

• For those of you that received the SBA 7(a) loan subsidies in 2020 (where the SBA made payments for 6 months on your behalf), that program has been extended for another 3 month beginning in Feb, 2021.
• In addition, for those in "underserved" businesses (namely restaurants and hotels), they will get an additional 5 months of subsidy for a total of 8 months.