SBA Paycheck Protection Program Reopens

The U.S. Small Business Administration (SBA) announced it has reopened the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders for First and Second Draw loan applications to SBA.   To access the SBA PPP website, click here.

The reopening of the PPP is part of the Consolidated Appropriations Act of 2021, a bill containing $900 billion in pandemic relief to provide aid to individuals and businesses and avert a partial government shutdown.  One of the most significant provisions of the law provides tax relief to recipients of PPP funds. The language specifically states that no amount of PPP funds shall be included in gross income AND no deduction (of eligible expenses) shall be denied. The measure had the strong support of RVDA and other business groups.

In addition to lifting the PPP tax burden and simplifying PPP forgiveness, the act provides additional support for small businesses through the extension and expansion of payroll tax credits, extension of SBA debt relief, and the Second Draw” PPP loans.
PPP Eligibility

  • A PPP borrower is generally eligible to apply for a Second Draw PPP loan if it: 
    has received a First Draw PPP loan and fully uses the proceeds for authorized expenses;
    has no more than 300 employees; and 
    can show at least a 25 percent reduction in gross receipts between comparable calendar quarters in 2019 and 2020 

Please note: Dealerships applying for a new PPP loan must certify that the loan is “necessary to support ongoing business operations in light of current economic conditions.” This parallels the certification dealerships made when applying for PPP loans in 2020. Dealers interested in applying for a new PPP loan should take the time to consult with legal counsel, accountants and prospective lenders. 

For more information from SBA on Second Draw loans, click here.
For more inforamtion form SBA on First Draw loans, click here.

Payroll Tax Credits

  • Extends and expands the refundable employee retention tax credit (ERTC), which was established in the CARES Act, through July 1, 2021

  • Expands eligibility for the credit by reducing the required quarter-over-quarter decline in gross receipts from 50% to 20%

  • Modifies the threshold for treatment as a ‘large employer’ by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees

  • Increases the credit rate, from 50% to 70%

  • Raises the limit on per-employee creditable wages from $10,000 for the year, to $10,000 for each quarter

  • Provides that employers who receive PPP loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds

Extension of SBA Debt Relief

  • All borrowers with qualifying loans approved by the SBA prior to the CARES Act will receive an additional three months of P&I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month

  • After the three-month period described above, borrowers considered to be underserved—namely the smallest or hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month

  • SBA payments of P&I on the first 6 months of newly approved loans for all loans approved between February 1 and September 30, 2021, also capped at $9,000 per month

Targeted Expansion of EIDL Program

  • Provides $10,000 grants to eligible applicants

  • Must be in a low-income community

  • Have suffered an economic loss of greater than 30 percent

  • Not more than 300 employees

  • For more information EIDL, click here.