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Economic Development Collaborative (EDC) — EDC Business Alert

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NEW COVID-19 LEGISLATION
Congress recently approved a new stimulus package providing funding for the federal government through the remainder of fiscal year 2021 and the latest installment of COVID-19 related measures. Below is a brief synopsis of the information related to PPP, SBA Loans, the Emergency Capital Investment Program and Unemployment Insurance.
The SBA and Department of Treasury have not released their formal announcement and information regarding the roll out of the programs listed below. The EDC will be actively engaged with these organizations as the situation develops.
Paycheck Protection Program Updates
Under new legislation the Paycheck Protection Program will reopen, date to be determined through March 31, 2021. Updates as follows:
  • Increases the PPP loan amount for restaurants and hotels from 2.5x payroll to 3.5x, providing an extra month’s worth of payroll support.
  • Simplifies the PPP loan forgiveness application for loans under $150,000, requiring a one-page letter from the borrower to the lender stipulating basic criteria and providing simple, high-level details.
  • Tax related updates:
  • Deductions are allowed for deductible expenses paid for by any forgiven amount from the PPP loan.
  • Expansion of list of eligible expenses to include:
  • Software, tech, cloud computing, and other human resources and accounting needs
  • Covered property damage associated with ‘disturbances’ happening during 2020
  • Covered health and safety expenses (PPE, testing, etc.)
  • Covered supplier costs (supplies, inventory, etc.)
  • Benefits such as life insurance, disability insurance, vision and dental insurance
  • Gross income does not include any forgivable amount of the PPP loan.
  • Borrower may select their covered period end date, between 8 and 24 weeks after origination.
  • Codifies rules for faith-based organizations and churches to ensure they keep their eligibility.
  • Expands PPP eligibility to include 501(c)6s, destination marketing organizations (DMOs), housing cooperatives, newspapers, broadcasters and radio stations. Effective date is ‘as if it were included in the CARES Act’, meaning 501(c)6 organizations are effectively retroactively eligible. Criteria for 501(c)6 Organizations to receive PPP:
  • For organizations with less than 300 employees
  • Not more than 15% of gross receipts from lobbying activities
  • Not more than 15% of organization activity constitutes lobbying
  • Not a professional sports league or political campaign or activity
  • Repeals a provision from the CARES Act requiring PPP recipients to deduct their EIDL advance from their PPP loan forgiveness amount.
  • Extends the repayment period of deferred payroll taxes through December 31, 2021. Penalties and interest on deferred unpaid tax liability will not accrue until January 1, 2022.
  • PPP eligibility for small businesses interested in receiving a second loan:
  • Max loan amount of $2 million
  • For organizations with less than 300 employees
  • Must have used or will use the full amount of first PPP loan
  • Must show at least a 25% reduction in revenue in the first, second, or third quarter of 2020 as compared to the same period in 2019; applications submitted on or after January 1, 2021, may use a fourth quarter 2020/2019 comparison
  • 60/40 cost allocation between payroll and non-payroll costs to receive full forgiveness remains the same for 2nd PPP loan
Economic Injury Disaster Loan
Small businesses, small agricultural cooperatives and most private nonprofit organizations located in a declared disaster area and which have suffered substantial economic injury may be eligible for an SBA Economic Injury Disaster Loan (EIDL). The EIDL program is open until 12/31/2020. For more information CLICK HERE.
Unemployment Insurance
  • Pandemic Unemployment Assistance (PUA, for those self-employed, freelancers or independent contractors, is extended until March 14, 2021, and the maximum number of weeks of eligibility is extended from 39 weeks to 50 weeks.
  • Federal Pandemic Unemployment Compensation (FPUC), an additional payment for those collecting certain unemployment insurance benefits (including regular unemployment compensation, PUA and PEUC), is reinstated at $300 per week from the week after December 26, 2020 and runs through March 14, 2021.
  • Pandemic Emergency Unemployment Compensation (PEUC), for those who have exhausted their regular unemployment compensation benefits, is extended until March 14, 2021 and the number of weeks of eligibility is extended from 13 weeks to 24 weeks.
LOCAL NO-COST BUSINESS CONSULTING AND BUSINESS LOANS
If your business has experienced economic injury due to the impact of COVID-19, you do not have walk alone. The EDC’s top-tier Small Business Development Center Advisors are available to discuss your business needs and provide access to the EDC’s Disaster Bridge Loan Fund. Get started today by calling 805.409.9159 (ENGLISH) or 805.309.5874 (SPANISH).