The second relief package signed in late December has been updated to better serve the needs of small businesses and non-profits. This week, US Chamber Executive Vice President and Chief Policy Officer, Neil Bradley held Small Business Updates to discuss the newest $900 billion coronavirus stimulus bill and how you can take advantage.
Employee retention tax credit
Originally listed in the CARES Act of 2020, the ERTC was an option for financial relief for businesses if they did not want to use a PPP Loan. Congress has updated this program so companies can take advantage of both ERTC and PPP with respect to wages that are not paid for with forgiven PPP proceeds. In the first and second quarter of 2021, employers that meet the eligibility can receive a tax credit for up to $14,000 per employee. Eligible businesses must have less than 500 employees and must have experienced a 20% decline in gross receipts in one quarter in 2020, compared to the same quarter in 2019. This credit is both refundable and advanceable.
“The IRS sends you a check for the difference between what you would have paid in taxes and the eligible tax credit,” Bradley said. “Importantly, you can apply to receive an advance on this tax credit, which can help with cash-flow issues.”
Bradley strongly encourages businesses to talk with their tax preparers and payroll companies immediately to see if they can take advantage of the expanded ERTC.
Paycheck Protection Program
The bill authorizes approximately $285 billion in this new round PPP. The criteria are that if your business has suffered revenue declines of more than 25 percent in any given quarter this year compared to last year then you will be eligible. The loans are up to $2 million and you can choose an 8 or 24-week forgiveness period. Furthermore, the IRS will allow businesses that got their Paycheck Protection Program loans forgiven to write off expenses paid for with that money. Bradley said businesses should consider applying even if they did not submit the first time.
If you’re eligible, reach out to your banking lender about applying for the loan.
Economic Injury Disaster Loan (EIDL) grant program
You can apply for the EIDL grant through your SBA. “These are $10,000 grants that you don’t have to repay,” Bradley said. “And if you got an EIDL grant for $2,000, you can also apply for that $8,000.”
Your business can better support restaurants in 2021 to 2022. Now 100 percent of your business meals are deductible.
“If you already have an existing SBA Section 7(a) or 504 Microloan then you can get up to 8 months of forgiveness (3 months plus an additional 5 months if you’re in a hard hit industry such as food service and accommodation, arts, entertainment and recreation, education; and laundry and personal care services) of principal and interest payments – capped at $9,000 per month” said Gene Marks of The Hartford.
“You can save up to $54,000 of principal and interest payments on a new loan or $72,000 on an existing loan, depending on your industry. These are enormous savings and can finance your growth.”
For further information on the new stimulus, check out these resources.