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Small Business Provisions in the American Rescue Plan

March 15, 2021

Shared by Leon LaBrecque, Sequoia Financial Group

Payroll Protection Program

  1. First and Second Draw Loans
    • Scheduled to end on March 31 – House and Senate have proposed legislation to extend until May 31, 2021, with the SBA allowed to process applications through June 30, 2021. 
    • The American Rescue Plan Act of 2021(ARP) added $7.25B to PPP that increased total funding of $291.65B.
    • ARP also added additional nonprofits that qualify including 501(c)(5) labor and agricultural organizations and allows those that were waiting on SVOG program to apply as well. 
    • SBA has received around $176B of applications and issued $165B in loans to date for 2021 PPP loans. 
    • Validation error codes are still affecting about 20% of applications. 
    • Schedule C businesses – Rules have changed to allow for those that have not received a loan yet to apply using gross income vs net income. 

$100,000 annual limit still in place ($20,833 maximum). Discussions are taking place on this being retroactive. 

  1. Loan Forgiveness
    • 2020 PPP loans – $168.6B forgiven out of $521.1B of loans.
    • 99.7% of loans that have been processed have been forgiven.   
    • $87.1B are in process, $61B of which are over $1M. 
    • Loans over $2M that have an increased review requirement are not moving.  The 90 day turnaround is being ignored with no communication. 
    • If your client or prospects have loans over $2M, they should consider engaging us for the review of their forgiveness application and necessity documentation before filing.
    • If you plan on filing an application for PPP2 before it ends and haven’t filed for forgiveness, you should hold off if you can as this could cause additional delays. 
    • Guidance has been issued by the IRS for PPP interaction with the Employee Retention Credit (ERC). 

Shuttered Venue Operators Grant Program (SVOG)

  1. Created from Economic Aid Act on 12/27/20, this program also runs through SBA. 
  2. Allows qualifying businesses to receive grants for 45% of their gross earned revenue up to $10M. 
  3. Applications for this program should start being accepted in early April.
  4. The ARP added $1.25B to $15B already funded. 
  5. Those holding out for the SVOG can now apply for a PPP loan because of the delayed start as mentioned above. 

Restaurant Revitalization Grants

  1. $28.6B new program established this week through ARP to be administered by the SBA similar to SVOG
  2. Eligible entity includes a restaurant, food truck, food stand, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room and taproom with less than 20 locations who has not received a grant under SVOG is not a public company.
  3. Grants are limited to $5M per physical location and shall not exceed $10M in total for eligible entities and affiliates. 
  4. These grants will not be taxable and expenses will be deductible similar to PPP forgiveness. 
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