• Ceterus

Mid-February Small Business Update

Given the lack of formal updates and guidance from the Treasury Department, SBA and IRS for most of 2021, I thought I would put out some information that I have gathered related to various government assistance programs and things I am hearing that may impact small businesses going forward.


Payment Protection Program—Loans


To date more than 6.8 million loans have been approved totaling $648 billion. There is approximately $150 billion left in the program, which is set to expire on March 31, 2021.


There are many reports about significant difficulties getting first and second draw loans processed. The SBA has added a number of checks in their system to help detect and prevent fraud this time around. These changes appear to be adding significant amounts of time from loan application to approval. In some cases, we are hearing it is taking over a month to get the loan approved. Several very large professional organizations have reached out to the SBA, Treasury Department, and Congress to help understand what problems are being faced and how to navigate them efficiently.


Payment Protection Program—Forgiveness


PPP forgiveness is moving very slowly at this point. We have heard that lenders have paused processing PPP forgiveness applications for loans under $150,000 due to issues with the SBA processing systems. Additionally, lenders have prioritized first and second draw PPP loans given the short window of time the program will be open.


In 2020, there were over 5.1 million loans approved. Of those 3.5 million have yet to file a forgiveness application. The good news is nearly 100% of forgiveness requested has been granted so far. Clearly there is a long way to go and we will need to watch and see how things play out over the remainder of 2021 related to forgiveness, as well as how oversight will be handled at the SBA.


New Stimulus


President Biden announced a new $1.9 trillion stimulus plan. The plan includes $50 billion for small businesses. Assistance will come in the form of additional PPP and EIDL funding, as well as targeted grants and loans for the hardest hit small businesses.


The House is targeting a vote on the stimulus plan on February 26. It appears likely that the Senate would have modifications to the plan as it stands today, which could extend out how long it takes for the stimulus plan to be fully approved and make it to President Biden’s desk. As of today, it looks like the plan could be fully approved by mid-March.

Employee Retention Credit


We plan to push out a tool to help you analyze what your potential credit may be in the next week. The tool is focused only on the employee retention credit. Consideration must be given to PPP forgiveness as well as you can only apply wages to forgiveness or the employee retention credit (cannot double dip).


An important nuance of the employee retention credit that is not discussed often enough is the tax impact. The employee retention credit is a direct offset to payroll expense, thus increasing your taxable income. Changes in tax liability should be considered. You should also be considering whether to extend your tax return or not. If you file your tax return prior to obtaining the employee retention credit, you may be forced to amend your 2020 tax return upon receiving the credit.


As a reminder, please make sure to check available resources often to ensure you are staying up to date with rules and guidance provided by those administering these programs. Below are links to helpful sites. Ceterus Resource Center [IRS] FAQ's: Employee Retention Credit Under the CARES Act [US Department of Treasury] CARES Act Assistance