Interim Stimulus Plan to Provide Additional CARES Act Funding
Additional $310 Billion for the PPP
Due to an extremely high demand for funds, the PPP has been replenished with an additional $310B in funding. In this round of funding, they have designated $30B for mid-sized banks/credit unions and $30B for smaller lending institutions. PPP loans have a 1% interest rate and are calculated on a 2.5x multiplier of the average monthly payroll in 2019, up to $10M. The loans are forgivable as long as at least 75% of the funding is used for payroll (up to 25% may be used for rent, mortgage interest and utilities). This creates another chance for eligible businesses and non-profits to access these low interest loans that have the potential to be fully forgiven. Eligible entities with under 500 employees should contact the firm today if they are interested in getting a PPP loan. This new round of funding will likely go fast.
Economic Injury Disaster Loan (EIDL) Replenished with $60B
The Interim Stimulus Plan also adds $50B in loans and $10B in grants to the Economic Injury Disaster Loan (EIDL) program. This program allows small businesses with less than 500 employees experiencing a loss of revenue due to COVID-19 to obtain advances of up to $10,000. The loan advance does not have to be repaid. Loans can be made for up to $2M with a 3.75% interest rate and the repayment period can be up to 30 years, determined by need.
How Much of Your PPP Loan is Forgivable?
The main feature of the PPP loans is that they may be forgiven if the funds are used for payroll, rent, mortgage payments, and utilities. Now that businesses have filed for their PPP loans, they need to be vigilant that they meet the loan forgiveness standards. If a business owner uses PPP funds for unauthorized purposes, the SBA will direct the business owner to repay those amounts. Further, if the business owner knowingly uses the funds for unauthorized purposes, the business owner will be subject to additional liability such as charges for fraud. Additional information can be found here or by contacting our office.
Employer Tax Credits.
The CARES Act has created several new tax incentives to employers. Additional information can be found here.
Track or Update IRS Economic Impact Payment Information.
The IRS has set up a website for individuals and families to check the status of their economic impact (stimulus) payment. It can be found here.