CAA 2021 - Impact on PPP

As our valued client, we wanted to provide you with a summary of the main points with respect to the Consolidated Appropriations Act that was signed on 1/2/2021. Please pay special attention to the items in bold as they are changed or new with this Act and will be important for you. This is a summary we are providing based upon the information we have learned, the items below are subject to change at any time.

 
Funds available through 3/31/21 or until funds exhausted
 
 
Eligibility
 
o   Any small business, self-employed, & independent contractors with <500 employees
 
o   Must attest that loan is necessary to support ongoing operations
 
o   Must be in business by 2/15/20
 
 
 
Loan amounts
 
o   2.5x average monthly payroll costs for 2019
 
o   2.5x net profit from 2019 Schedule C for self-employed/independent contractor with no employees
 
§  If you show 0 or less profit you are not eligible for a PPP loan
 
§  2019 1040 & 2019 1099-MISC must be provided to show proof of self-employment
 
 
 
Second Draw loans
 
o   Fully spent 1st PPP loan prior to disbursement of 2nd draw
 
o   <300 employees
 
o   Demonstrate at least 25% reduction in revenue between corresponding quarters in 2019 and 2020.
 
o   Max draw is $2 million
 
o   Can only receive one 2nd draw loan
 
o   For business in accommodations of food services industries
 
§  May obtain increased loan amount of 3.5 times the average monthly payroll costs, up to $2 million cap. 
 
 
 
Eligible costs
 
o   Salaries & wages to employees
 
o   Health Care & Insurance Benefits
 
o   Employer paid retirement benefits
 
o   State or local payroll taxes
 
o   Rent
 
o   Utilities
 
o   Mortgage interest (no principal or prepayments)
 
o   Covered operations expenditures
 
 
 
Forgiveness
 
o   At least 60% loan must be spent on payroll costs
 
o   Covered period is choice of 8 or 24 week
 
o   EIDL advance not excluded
 
o   1 page forgiveness form for loans <$150,000
 
o   Deductions will not be prohibited for expenses that qualify for PPP loan forgiveness
 
 
 
Employee Retention Tax Credit
 
o   Credit is taken as payroll tax offset
 
o   Credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee ($5,000 maximum per employee)
 
o   Available with respect to wages paid 3/13/20 to 12/31/20. 
 
o   An employer is eligible if, during any calendar quarter of 2020, it either has
 
§  operations fully or partially suspended due to a governmental order related to COVID-19 or
 
§  a decline in gross receipts of more than 50% compared to the same quarter of the prior year  
 
o   PPP borrowers may be eligible for the credit to the extent qualifying wages are not paid using forgiven PPP loan proceeds
 
 
 
Economic Injury Disaster Loans (EIDLs)
 
o   Grants up to $10,000
 
o   Amount of grant reduced by any EIDL grant previously received
 
o   Business must be located in a low-income community
 
o   Business has suffered an economic loss of at least 30%
 
o   Grants not deducted from PPP loan forgiveness
 
o   Grants not considered taxable income
 
 
 
Employee Social Security Tax Deferrals
 
o   Allows employers the option to defer withholding and payment of SStax for employees whose wages <$4,000 biweekly, or equivalent amounts in other pay
 
o   Repayment period extended to 12/31/21
 
o   Employers remain liable to collect and pay full amount of the SS taxes deferred

Similar Posts

We would love to hear more about how we can help you.