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| New Guidance Issued on Next Round of PPP Loans: An Overview for Small Businesses Posted: 07 Jan 2021 06:56 PM PST On January 6, 2021, the Small Business Administration (SBA) issued new guidance on which businesses are eligible and how to apply for the new round of Paycheck Protection Program (PPP) funds authorized in the new Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) signed into law on December 27, 2020. The main takeaway is that any business that did not receive a PPP loan previously, or those businesses that experienced a 25% reduction in revenue in one quarter of 2020 over 2019, can apply for this new round of PPP. Even more helpful, businesses, sole proprietors, and independent contractors applying for loans of $150,000 or less and based on the same calculation as round one—2.5 times one month of 2019 payroll—do not have to submit new documentation if applying through the same lender. The new regulations do give lenders the ability to request additional documentation from borrowers if they deem it necessary. These borrowers of less than $150,000, however, have to document the reduction in revenue upon applying for forgiveness. The new program will open as soon as lenders can reestablish the process, and it expires on March 31, 2021. Borrowers of loans in excess of $150,000 will have to document their reduction in gross receipts upon applying for round two of PPP. The simplest method to do so, according to the regulations, is to submit 2020 and 2019 tax returns if available. If not, quarterly financial or bank statements may suffice. Unlike the first round of PPP, however, while the method of calculating the new loans is the same, the new loans are capped at $2 million. In addition, while first-time borrowers can have 500 or fewer employees as in round one of PPP, second-time applicants can only have a maximum of 300 employees. Terms and conditions of PPP loans round twoThe new PPP loans are largely subject to the same terms and conditions of the first round, including the following:
Borrowers applying for a second round of PPP must also have used all of the first tranche of funds prior to or by the date of receiving new funds. And, while those businesses that were or are temporarily closed due to the Covid-19 pandemic may apply for round two, those business that are permanently closed cannot. The new law also carved out additional benefits for restaurants, hotels, and other businesses under the NAICS Code 72. These businesses can calculate their loan amount by multiplying one month of 2019 payroll by 3.5 instead of 2.5, thus receiving more funds. This also applies to seasonal businesses and those without 12 months of operating history. Further, for restaurants and hotels with multiple locations, as long as each one has fewer than 300 employees, each individual location may apply for a separate loan. The maximum loan amount across all locations, however, is capped at $4 million. Other Articles From AllBusiness.com:
More businesses now eligibleThe Economic Aid Act also expanded the list of businesses that are now eligible to receive PPP loans. These new groups include 501c(6) organizations like chambers of commerce, nonprofits and religious entities, and local news organizations. These loans are also capped at $2 million. In addition, the new law earmarked $15 billion in straight grants that do not need to be repaid for live entertainment venues, which were some of the hardest hit businesses due to Covid shutdowns. These businesses include theaters, museums, and zoos. It also includes businesses that represent performers. It is important to note that the main activity of a business must be live entertainment, so a restaurant that provides a nightly singer, for example, would not be eligible. The SBA also issued Guidance on Accessing Capital for Minority, Underserved, Veteran, and Women-Owned Business Concerns in an effort to address the main criticism of the initial PPP. This criticism, harsh at times, was that small business of less than 10 employees, women- and minority-owned businesses, and those in economically disadvantaged areas, were shut out of the program while large businesses, chains, and publicly traded companies received funding. This guidance outlined the following set-asides for these businesses:
The guidance outlines that the SBA will only accept loan applications from community financial institutions for at least two days after the loan portal reopens, and that it will engage in community and public outreach along with a media campaign to promote the program and encourage these groups to apply. The SBA also outlines the businesses that were not eligible to apply for the new round of PPP, including the following:
New forgiveness rulesWrit large, the new PPP round has the same requirements for having the loan forgiven and turned into a grant. Borrowers still have to use 60% of the funds on payroll and 40% on expenses over a 24-week period. In a positive development, borrowers of loans of $150,000 or less can "check the box," self-certifying they used funds according to regulations, making the application process much simpler. In addition, the Economic Aid Act expanded the list of expenses from the original short list of rent, utilities, mortgages, and interest on existing debt, to include essential supplier costs, personal protection equipment, and operational expenses such as software, accounting, and cloud computing. RELATED: SBA Easing Forgiveness of Paycheck Protection Program Loans of $50,000 or Less As with round one, borrowers must still attempt to keep their head count intact to the extent possible. A reduction in over 25% of salaries will result in a commensurate reduction in overall forgiveness. The rules do provide the caveat that if a borrower cannot find employees to rehire, or if they are shut down due to Covid, they have a "safe harbor" and will not be penalized for a reduction in head count of greater than 25%. The rules also now do not require borrowers to deduct any grants they received if they applied for the SBA's other loan program, the Economic Injury Disaster Loans (EIDL). These grants were anywhere from $1,000 to $10,000 depending on the number of employees. The EIDL grant program did run out of money and the Economic Aid Act refunded the program to the tune of $40 billion. Businesses that did not apply for the grant or that did not receive the full amount can now apply. Tax consequencesOne of the biggest issues with the first round of PPP was the unintended tax consequences. While it was clear that a forgiven PPP loan would not be considered income, Treasury guidance did not permit normally deductible expenses paid for by PPP funds to be deductible. By incurring this tax burden, the government was, in fact, taxing PPP grants. Due to effective lobbying by every business group in Washington, the new law fixed this problem and now expenses paid for by PPP funds are deductible. Finally, businesses that received PPP loans were not eligible to also take the Employee Retention Tax Credit. This program allows employers to deduct up to $14,000 per employee on tax withholdings. Now businesses are able to get PPP loans and avail themselves of the tax credit, providing they can show a reduction of revenue of 25% or more in a quarter of 2020 over 2019. The tax credit is available in Q1 and Q2 of 2021 and is both refundable, meaning the IRS will send employers checks, and advanceable, meaning employers can apply for the credit in advance of paying their employees. ConclusionWhile it took Congress nine months to pass this new legislation and President Trump over a week to sign it, the new measure does provide many fixes to PPP and opportunities for new funding at a time when economic uncertainty still looms. And like with the first round, new regulations are certain to be forthcoming, especially around the outstanding issue of audits for borrowers over $2 million. Further, with the new Biden Administration being sworn in January 20, 2021, and a Democratically controlled Senate and House, new regulations and relief packages are on the horizon. In the meantime, the Economic Aid Act and new regulations improve PPP and expand it to those businesses that need it most. RELATED: Trump Finally Signs the Relief Act—10 Important Things You Need to Know The post New Guidance Issued on Next Round of PPP Loans: An Overview for Small Businesses appeared first on AllBusiness.com. Click for more information about Neil Hare. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.  |
| 5 Expert Career Tips from a Minority Woman Executive in Tech Posted: 07 Jan 2021 08:35 AM PST By Angel Ishmael Great strides have been made toward women's equality in the workplace, but there are still industries that have a lot more work to do. Data from The National Center for Women & Information Technology (NCWIT) reports that women make up 57% of all professional occupations, but hold only 25% of jobs in the technology field; Black women hold only 3% of that number, showcasing the glaring lack in diversity in the technology industry. In a particularly difficult year for job security and hiring, women—especially women of color—must combat inequality and a lack of representation in the technology industry. I am a woman of color and a divorced working mom of three who has faced my fair share of hurdles while climbing up the career ladder in the technology industry. From trying to balance motherhood and work to trying to make a name for myself in a world where it's been a challenge to get ahead, I have surrounded myself with women on similar paths who have provided the support to keep me moving forward in my career. Even though I’m seen as an underdog or am simply overlooked, I have learned to implement the following career tips into my daily life in order to be the best version of myself both professionally and personally. Career tip #1: Find yourself a mentor (or two)Finding someone who has accomplished what you are working towards in your career can provide you the guidance you need to get that next promotion or raise. A group of people that you can rely on and ask for advice is essential to have, especially during these turbulent times for the job market. You never know the connections or experience someone else has that could help you down the line or in your next career move. In my case, my mentor is a cousin who has inspired me in so many ways. She lost her husband who was a Colorado State Representative, and then she decided to run for office, won, and filled his spot where she later became one of the leaders behind the state’s CROWN Act. In my cousin, I see a woman who has paved the way for others, which inspires me in so many ways in my own career. Career tip #2: Always keep learningNever stop learning and educating yourself on topics that interest you or that can be useful to your career. Read something daily—whether an online article, a blurb in a magazine, or something on social media—that will help you in some aspect of your life. Always keep your curiosity alive no matter what part of your career journey you are in, and never lose the drive to keep learning new things. For me, being in the digital marketing space, SaaS was something I had to learn more about the more I got involved in the industry. I have never stopped learning and trying to educate myself, which has helped me reach the position where I am today. Career tip #3: Delegate, delegate, delegateI cannot stress this enough, as I have struggled with this earlier in my career. As much as we want to, we cannot work on everything for everyone at the same time. Rely on your coworkers and delegate different tasks to them, which will allow you to focus on your tasks at hand. This involves good communication and trusting the work that your teammates do. Knowing who to delegate what tasks to and when shows you are in control and that you understand the ins and outs of your job. Other Articles From AllBusiness.com:
Career tip #4: Create an everyday routineHaving a routine is critical to achieving success. I have learned over the years that many people who are successful have a daily routine that they rarely, if ever, steer away from. This could mean going for that morning jog before work every day or eating a certain cereal each morning. Whatever it is, your routine can positively impact your life both professionally and personally. For me, I have learned that eating well, exercising daily, and choosing three things a day that I MUST accomplish is a routine that works for me. Implementing a simple routine helps create normalcy in your day, so even if you are busy or stressed with work, you at least will have simple tasks that you enjoy doing. Career tip #5: Set goals for yourself with a 12-week planWith this system, you create 12-weeks worth of attainable goals that help you outline what needs to be accomplished in order to get to where you want to be. This is perfect if you are looking to make that next career move and are not sure where to start. By setting small, achievable goals every week, you can meet an overall goal over time without becoming too overwhelmed. Also, completing small goals over three months can give you a greater sense of accomplishment and be a constant reminder of your achievements. As a communications major, being one step ahead of the game has always felt natural to me. With this goal-setting program, you are setting yourself up for success and clearly outlining the steps you need to take to reach your goal. Being one step ahead lets you know what direction you need to move next. We have to believe it to achieve itI have learned as a working woman, a minority woman, a single woman—however you want to label it—that women can achieve all that we want, no matter our circumstances. We can break the glass ceiling, we can become VPs, CEOs, presidents of companies, and more. We have to believe it to achieve it, and align our thoughts and actions in order to act on the opportunities when they arise. By following these simple career tips that can be easily implemented into your daily life, climbing the career ladder in an industry that may seem too slow to diversify becomes a little bit easier to accomplish. RELATED: 5 Obstacles Women Face in Business The post 5 Expert Career Tips from a Minority Woman Executive in Tech appeared first on AllBusiness.com. Click for more information about Guest Post. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.  |
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