Sign up: Loans, grants available
Tweaks in PPP and new funds aim to help you
My oh my! Since the passage of the American Rescue Plan signed into law by President Joe Biden on March 11, there are lots of new benefits and government support for small businesses.
There have been changes to the Paycheck Protection Program (PPP) and new funds made available for restaurants and companies that provide live performances.
The PPP enabled small businesses and the self-employed to get a forgivable loan – in other words, a loan that could easily turn into a grant. But it was pretty limited on how much you could get if you were self-employed or a gig worker.
If you are a sole proprietor who files a Schedule C on your federal income tax return – and you qualify for a first or second PPP loan and haven’t applied – you can get a larger amount.
You can calculate your maximum loan amount based on your gross income instead of the bottom line of your Schedule C. (Line 7 of your schedule C instead of Line 31.) This means – in almost every case – you can get more money.
Let’s say you are a driver for a ride service, and you “make” $20,000 a year. That’s your gross income. But you deduct all kinds of expenses – your gas, your car, the little bottles of water you have for riders. By the time you deduct
all that, the bottom line of your schedule C is $10,000. Before this change, you could only apply for a PPP based on $10,000 – now you’d be able to apply based on $20,000.
What if you’ve already applied for – and received – a PPP loan using only net income? Can you go back and get the higher amount? No. This change isn’t retroactive, though many are lobbying to have it made retroactive.
PPP deadline extended
The deadline to apply for the PPP was extended. On March 30 – right down to the wire – the deadline was extended for
your first or second or both to May 31. If you didn’t apply for your first PPP loan or your second PPP loan, you still can.
If you only recently applied for your first draw PPP loan, you might have been frustrated by being told you had to wait until your first PPP loan forgiveness period was up – at least eight weeks – to apply for your second. That appears to no longer be the case.
After a long wait, the Small Business Administration is set to open applications Thursday for a new program offering grants – not loans – to live venue businesses forced to shut during the COVID-19 pandemic. These included movie theaters, museums and performing arts representatives.
Grants are available for up to 45% of your 2019 gross earned revenue, and you can apply for up to $10 million. The amount of $2 billion has been reserved for small operators with up to 50 fulltime employees.
Restaurant help
Restaurants and bars were among the hardest hit businesses last year. There’s help in the form of grants, not loans. The Restaurant Revitalization Fund (RRF), part of the American Rescue Plan, provides a total of $28.6 billion in grants to restaurants and bars with 120 locations. You can get up to $5 million per location, up to a total of $10 million. The amount is determined by subtracting 2020 sales from 2019 revenues.
All kinds of food and drink establishments are eligible, including restaurants, bars, food trucks, caterers, tasting rooms and brewpubs. There’s good news for smaller businesses: $5 billion is set aside for establishments with $500,000 or less in gross receipts in 2019.
You will apply through the SBA, but applications are not yet open.
And there’s more
There are changes in the Employee Retention Tax Credit, changes in EIDL (Economic Injury Disaster Loan) and other small-business programs.
There’s so much to cover so email me at rhonda@planningshop.com, and I’ll send you details and updates on these and future government help available to you.