President Donald Trump formally signed into law the most current COVID-19 stimulus package on December 27, 2020, amounting to $900 billion in additional pandemic-related aid for small and mid-sized businesses and the almost 7% of Americans who are still unemployed.
Within the bill are several critical sections, additions, and clarifications that every business owner should know to navigate the backside of the pandemic successfully and ensure that their companies are able to take advantage of new opportunities as the economic recovery moves into 2021.
Just like the original CARES Act passed last spring, there’s a lot going on with this new law, and because it was just passed there’s still a lot we don’t know yet, though the broad strokes of the bill’s intent and how the funds will assist small businesses and manufacturers are clear. There are details of course, but broadly speaking, here’s what we do know:
- New PPP loan funds are available for businesses that need a second loan or for businesses that didn’t apply the first time around following similar guidelines. For those who already had a PPP loan, in order to qualify for a second loan they need to have had experienced a 25% reduction in revenue in a calendar quarter in 2020 compared to 2019, and not have more than 300 employees. At the time of writing this, SBA has still not provided timing for when the program will reopen for new loan applications, but this is our first priority.
- Emergency Injury Disaster Loan (EIDL) grant advances up to $10,000 will no longer be deducted from a company’s PPP loan forgiveness amount. The new law clarifies that EIDL loans are, in fact, grants, and SBA has already stopped deducting those advances from new PPP forgiveness submissions. It’s also retroactive for loans that have already been forgiven
- Simplified forgiveness for PPP loans up to $150,000—The PPP loan forgiveness process has been much more complex than anyone anticipated. The new bill’s simplified forgiveness process for the original PPP loans should eliminate a lot of this frustration, particularly for companies that don’t have a full-time CFO to manage this process
- More payments on existing SBA loans—The original CARES Act allowed for 6 monthly payments for customers with existing SBA loans. This has been extended for 3 more payments. But even this has some nuances that we’re trying to understand. More on this in an upcoming newsletter article
- No SBA guarantee fee for new, normal SBA loans—Outside of PPP loans, the new law allows for a $0 guarantee fee on all new SBA loans through September 2021. We don’t know when the official start date for the ‘no fee’ period is, but we want our customers to be able to take advantage of this funding opportunity as soon as the window opens
As of right now, we’re waiting on additional notices from the SBA and U.S. Treasury and incoming notices from the National Association of Government Guaranteed Lenders (NAGGL) that we can review and digest before ensuring that we’re providing clarity and certainty to our clients on the next steps they may want to take.
Stay tuned for more updates on the new law, its implementation, and how it affects you and your small business by visiting us here.
