Small Business Provisions in the American Rescue Plan
March 15, 2021
Shared by Leon LaBrecque, Sequoia Financial Group
Payroll Protection Program
- First and Second Draw Loans
- Scheduled to end on March 31 – House and Senate have proposed legislation to extend until May 31, 2021, with the SBA allowed to process applications through June 30, 2021.
- The American Rescue Plan Act of 2021(ARP) added $7.25B to PPP that increased total funding of $291.65B.
- ARP also added additional nonprofits that qualify including 501(c)(5) labor and agricultural organizations and allows those that were waiting on SVOG program to apply as well.
- SBA has received around $176B of applications and issued $165B in loans to date for 2021 PPP loans.
- Validation error codes are still affecting about 20% of applications.
- Schedule C businesses – Rules have changed to allow for those that have not received a loan yet to apply using gross income vs net income.
$100,000 annual limit still in place ($20,833 maximum). Discussions are taking place on this being retroactive.
- Loan Forgiveness
- 2020 PPP loans – $168.6B forgiven out of $521.1B of loans.
- 99.7% of loans that have been processed have been forgiven.
- $87.1B are in process, $61B of which are over $1M.
- Loans over $2M that have an increased review requirement are not moving. The 90 day turnaround is being ignored with no communication.
- If your client or prospects have loans over $2M, they should consider engaging us for the review of their forgiveness application and necessity documentation before filing.
- If you plan on filing an application for PPP2 before it ends and haven’t filed for forgiveness, you should hold off if you can as this could cause additional delays.
- Guidance has been issued by the IRS for PPP interaction with the Employee Retention Credit (ERC).
Shuttered Venue Operators Grant Program (SVOG)
- Created from Economic Aid Act on 12/27/20, this program also runs through SBA.
- Allows qualifying businesses to receive grants for 45% of their gross earned revenue up to $10M.
- Applications for this program should start being accepted in early April.
- The ARP added $1.25B to $15B already funded.
- Those holding out for the SVOG can now apply for a PPP loan because of the delayed start as mentioned above.
Restaurant Revitalization Grants
- $28.6B new program established this week through ARP to be administered by the SBA similar to SVOG
- Eligible entity includes a restaurant, food truck, food stand, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room and taproom with less than 20 locations who has not received a grant under SVOG is not a public company.
- Grants are limited to $5M per physical location and shall not exceed $10M in total for eligible entities and affiliates.
- These grants will not be taxable and expenses will be deductible similar to PPP forgiveness.