February 22, 2021

Two-Week PPP Application Window Opens Specifically for Small Businesses

New changes to the Paycheck Protection Program (PPP) were announced by President Biden on February 22. These tweaks to the PPP rules are meant to help small businesses and give them an exclusive window of time to apply for PPP funding starting February 24.

Details of the Latest PPP Changes

Another $284 billion was injected into the PPP program as part of the $900 Billion COVID-19 relief package signed December 27, 2020. Since applications opened in January, it’s estimated that the SBA has approved around $134 billion in forgivable small business loans. To improve equitable distribution of loans and help give small businesses an advantage, President Biden introduced the following changes:

  • An exclusive window for businesses with less than 20 employees to apply for PPP loans beginning February 24. Businesses with 20 or more employees will be locked out of applying until March 9.
  • Self-employed, sole proprietors and independent contractors can now use gross income, much like the recently changed calculation for farmers.
  • Business owners with non-fraud felonies and those who were/are delinquent on student loans are now eligible to apply for PPP funding.
  • At least $1 billion will be allocated for minority-owned businesses.

The Biden administration has not indicated whether they will try to extend the program after the current round expires March 31.

Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed on our COVID-19 Resource Center. Tune in to our video series PPP with Paul and Dan to learn more about the Paycheck Protection Program. To discuss your situation and recovery options, contact an Anders advisor below.

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February 16, 2021

PPP 1 and 2 Loans: What Expenses are Considered Covered Costs?

A second round of Paycheck Protection Program (PPP) loans brings many questions around funding eligibility and how the money can be spent to qualify for forgiveness. Once you have either a PPP1 or PPP2 loan, it’s important to understand what costs are covered so you can maximize forgiveness.

Similar to the first round, 60% of PPP2 funds will need to be used for payroll and 40% can be used for non-payroll expenses. Below is a list of nonpayroll costs that qualify and the related eligibility and documentation requirements.

Timing of Eligible Nonpayroll Costs

Eligible nonpayroll costs are those that are either:

  • Paid during the covered period
  • Incurred on or before the end of the covered period but paid by the due date after the covered period

Example: If rent for the month of October is due by November 1st and your covered period ended October 21, you would get to include a portion of that November payment to account for 21 of the 31 days.

Types of Nonpayroll Costs

Below is a list of eligible nonpayroll costs, assuming they meet the timing criteria above.

  • Interest payments on (most) business loan obligations that were in existence before February 15, 2020
  • Rent/lease payments on real or personal property under an agreement in place before February 15, 2020
  • Business utility payments for services in place before February 15, 2020, including electricity, gas, transportation, water, telephone and internet
  • Covered operations expenditures, including:
    • Payment for any business software or cloud computing service that facilitates business operations
    • Product or service delivery
    • The processing, payment or tracking of payroll expenses
    • Human resources
    • Sales and billing functions
    • Accounting or tracking of supplies, inventory, records and expenses
  • Covered property damage costs
    • Cost related to property damage and vandalism or looting due to the public disturbances that occurred in 2020, but cannot have been reimbursed by insurance
  • Covered supplier costs, including payments made to a supplier of goods for supply that meets the following criteria:
    • Is essential to operations of the business AND
    • Payment made pursuant to a contract, order, or purchase order that was either:
      • In effect any time before the covered period, OR
      • For perishable goods only, in effect any time prior to the end of the covered period
  • Covered worker protection expenses
    • Operating or capital expenditures to facilitate the change of business activities related to COVID. This may include purchases, maintenance or renovation of assets that create or expand:
      • Drive-through window facility
      • Indoor, outdoor, or combined air or air pressure ventilation or filtration system
      • Physical barriers such as a sneeze guard
      • Expansion of additional indoor, outdoor, or combined business space
      • Onsite or offsite health screen capabilities

Required Documentation

It’s important to keep proper documentation of expenses paid with loan proceeds to make the forgiveness process simpler when the time comes to apply. Make sure to keep track of the following documentation for each expense:

  • Copies of invoices, purchase orders, receipts or cancelled checks
  • Copies of account statements and lease agreements

Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed on our COVID-19 Resource Center. To discuss your situation and recovery options, contact an Anders advisor below. Tune in to our video series PPP with Paul and Dan to learn more about the Paycheck Protection Program.

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February 12, 2021

PPP with Paul and Dan Video Series

With new updates and legislation evolving quickly around the Paycheck Protection Program (PPP), our CARES Act Research and Response Team has been focused on relaying information you need to know. Two of the team members, Paul C. Rhea and Daniel K. Schindler, are sharing the latest changes around PPP loans and the forgiveness process in their video series: PPP with Paul and Dan.

View each segment of the series below. Check out more CARES Act content in our COVID-19 Resource Center, or learn how we can help your business recover from COVID-19.

February 12, 2021
February 8, 2021

December 29, 2020

December 29, 2020

November 10, 2020

October 13, 2020

October 7, 2020

September 18, 2020

September 4, 2020

August 28, 2020

August 21, 2020

August 13, 2020

July 24, 2020

July 16, 2020

June 25, 2020
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January 28, 2021

RECORDED WEBINAR – Employee Retention Tax Credit and the PPP

The newly expanded Employee Retention Tax Credit (ERTC) and second draw of the Paycheck Protection Program (PPP) has business owners asking important questions, such as:

  • Am I eligible for the ERTC?
  • How much can I claim for the ERTC and how?
  • Can I claim the ERTC if I have a PPP loan?
  • How can I maximize PPP loan forgiveness and ERTC eligibility?

Paul Rhea, Rebekah Tucker and Dan Schindler of the Anders CARES Act Team answer these questions and more in a presentation for the National Federation of Independent Business (NFIB).

Download the recorded webinar on NFIB’s website.

Visit our COVID-19 Resource Center for more resources. To discuss your situation and recovery options, contact an Anders advisor below.

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January 25, 2021

Employee Retention Tax Credit Eligibility

Find out if your business is eligible for the Employee Retention Tax Credit (ERTC) in 2020 or 2021.

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January 19, 2021

Creative Technology Uses for PPP2 Funding – Cloud Computing Services

Now is a perfect time to review your technology plan and assess how cloud technology can help your business in 2021. One of the new benefits to the Paycheck Protection Program Second Draw (PPP2) program approved in December 2020 is it now includes additional ways to spend your funds and still achieve 100% forgiveness. 

Under the new guidance issued for the PPP2, you can spend up to 40% of your PPP2 funds on technology which qualifies as “cloud computing services” for your business. Technology expenses were not included in the first round of funding, so this category is new. To jumpstart your thinking, we have deciphered a few ways you can utilize the PPP2 funds towards leveraging technology to modernize your business. 

Here are three ideas we think business owners and leaders can leverage technology to better their business using PPP2 funds while still obtaining 100% forgiveness: 

1. Data Analytics

Modern businesses are recognizing the power of data to win in today’s competitive marketplace. Microsoft’s PowerBI tool is a cloud computing service that has emerged as a leader in helping companies embrace analytics across the organization through its ease of use and simple interface. PowerBI can help you get the insights you need to make confident decisions and drive efficiencies in your business. Specifically, PPP funds could be used to pay for PowerBI subscriptions and implementation services such as creating initial PowerBI reports, setting up a data management program, or training your employees via a ‘Dashboard in a Day’ training session.

2. Cloud Readiness Assessment

PPP2 funds could be used to perform the initial readiness assessment to develop a Cloud Roadmap for migrating files, applications, or servers to Microsoft 365 or Azure. Migrations to a public cloud, such as Microsoft, can help improve your business operations and result in up to 30-40% total cost of ownership (TCO) savings, creating an ongoing competitive advantage for your business.

3. Process Automation via Microsoft Power Automate

New low-code/no-code solutions available now help businesses automate manual processes specific to them. These solutions, powered by the Microsoft Power Platform, enable businesses to automate their processes faster and reduce the cost of doing business. Microsoft’s secure Power Platform empowers business users, not developers.

Technology can be used to speed up adoption of newer technology, automate manual processes, or to help employees work from anywhere. If you have been looking for the right opportunity for your business to fully embrace cloud computing services, PPP2 funds could make this the right time.  

Next Steps

Anders Technology has the training, experience, and expertise to help your business understand the options under the new PPP2 guidelines and how you can prioritize your 2021 goals and budget to utilize your spending to fit your needs. Contact an Anders advisor below to discuss your situation and recovery options. Visit our COVID-19 Resource Center for more resources as it relates to the recovery of your business.

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January 19, 2021

Using PPP2 Funds for Technology Modernization via the Cloud

Round two of the Paycheck Protection Program (PPP) is upon us and Anders has been closely analyzing the contents to help companies identify strategies for maximizing the impact of their PPP funds.

While the majority of your PPP funds still need to be spent on payroll (60%), one of the biggest changes in the new round of PPP is the ability to spend up to 40% of funds on other types of pandemic related expenses. Specifically, the “covered operations expenditures” category allows PPP funds to be used to pay for cloud services that run your business.

Investing in Technology

Many businesses struggled to embrace the sudden shift to remote work caused by the pandemic in Spring 2020. In many cases these companies were constrained by their historical lack of investment in technology. Suddenly companies who were still using dated, on-premise technology were at a significant disadvantage compared to their cloud-enabled competitors.

PPP2 creates an interesting opportunity for small to midsize companies to modernize their operations via the use of cloud technology. The government is encouraging companies to invest in cloud solutions to improve business continuity and become more efficient.

What’s Covered?

The PPP defines “covered operations expenditures” as follows:

payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses;”

If we want to exercise this ‘cloud’ flexibility in the PPP loan, how do we interpret what qualifies as an expenditure?  The vast majority of cloud-based technology should qualify under the “cloud computing service that facilitates business operations” definition. Of course, be sure to discuss this with your PPP lender to confirm.

Many core ERP or CRM applications are cloud-based now and would qualify under the definition. Here are a few common solutions for small to midsize businesses that would almost certainly qualify:

  • Quickbooks Online or similar
  • ADP or similar
  • Bill.com or similar
  • Salesforce or similar
  • Netsuite or similar

The term “cloud” is imprecise and covers a lot of ground, which should create flexibility in how businesses are able to use their PPP funds. There are plenty of services, especially in the Microsoft family of services, to consider. Many common business solutions would also qualify as a ‘cloud computing service’, such as:

  • Email delivered via Microsoft 365,
  • Data Analytics powered by Microsoft PowerBI to provide insights into your business and start the automation journey for your small business,
  • Microsoft Azure for running server workloads outside the walls of your organization,
  • Microsoft Teams for calling, file collaboration and communications, and
  • Windows Virtual Desktops to power your Windows desktops from the cloud.

If any of these items have been on your radar to implement, now is the time to start planning because the timer starts for expenditures on the day you receive your PPP funds and you only have at most a 24 week window to spend the funds and achieve full loan forgiveness.

Understand Your Options

If your business has 500 or fewer employees and saw your gross revenues decrease by at least 25% in any quarter of 2020, then you should take a close look at the full requirements for both PPP2 and the Employee Retention Tax Credit (ERTC) to determine your eligibility.

Be careful with the expenditures you are looking to qualify to ensure you are following the ‘cloud computing service’ definition. For example, new laptops are likely not covered under the definition. Although laptops are valuable for accessing cloud-based applications, it is clear the intent is for business software and cloud functions.

PPP2 can be a lifeline for businesses hit hard by the pandemic. While the PPP2 rules are complex, the program can provide a significant opportunity to modernize your business to compete in the coming years.  Our advisors are closely following COVID-19 relief efforts and will continue to publish more insights to keep you informed. Visit our COVID-19 Resource Center or contact an advisor today to discuss your situation and recovery options.

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January 15, 2021

How the Stimulus Package is Impacting Not-for-Profit Organizations

The Not-for-Profit sector has finally received some good news as it relates to COVID relief and the new COVID Relief package recently signed into law. The biggest change is that industry organizations and professional associations are now eligible for PPP loans, which they weren’t before. This is great news for 501(c)(6) not-for-profits, as it allows them more flexibility in how to spend their money and provides some much-needed relief to those hit hard during this pandemic. Here are some of the key provisions for NFPs:

Paycheck Protection Program (PPP) loans administered by the Small Business Administration

In the recent bill passed, Congress appropriated more funding for this popular SBA program, with the biggest news being that PPP Loans are now available to 501(c)(6) organizations such as industry and professional associations. Previously, only 501(c)(3) organizations could qualify for this program. To make sure 501(c)(6) organizations are meeting all qualifications, consulting with their accountants and banks is an important first step, as there are specific thresholds regarding lobbying activities. The program now also has provisions for a “second draw” for entities that employ 300 or fewer employees and demonstrate at least a 25% reduction in gross revenues between the same quarters in 2020 and 2019. The “gross revenues” amount has also been clarified.  The maximum second draw loan amount is $2 million.

PPP Loan Forgiveness

The new legislation has updated the costs eligible for forgiveness to include:

  • Worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines,
  • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations,
  • Certain operating costs, such as software and cloud computing services and accounting needs
  • Covered property damage costs related to property damage and vandalism or looting due to public disturbances in 2020 that were not covered by insurance or other compensation

As before, 60% of the funds must be spent on payroll over a covered period for the Organization to be eligible for full forgiveness. The covered period is defined as any time period, at the election of the borrower, between 8 and 24 weeks. Also, the maximum loan amount has been reduced to $2 million. The new legislation has included a simplified forgiveness application process for loans of $150,00 or less. (The SBA is creating this application.)

Charitable Giving Deduction

The new legislation has kept the $300 above-the-line deduction for 2021  (which will be $600 deduction for couples filing jointly in 2021). This is great news for many donors who do not itemize their deductions. The bill also extends the increased limits on deductible charitable contributions for individuals who itemize (the AGI cap rule) through 2021.

Employee Retention Tax Credit

The legislation extends the Employee Retention Tax Credit through 6/30/2021. It also improves the refundable payroll tax credit by reducing the amount of required year-over-year decline in gross receipts from 50% to 20%, while increasing the credit from 50% to 70% of workers’ “creditable wages” of up to $10,000 for each of the first two quarters, for a maximum per worker benefit of $14,000. The ERTC expands full benefit to all employees of employers with 500 or fewer employees; larger employers can apply the credit only to workers who are paid but are not working. Finally, it provides that employers who receive Paycheck Protection Program (PPP) loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds. (See our Anders Blog on the ERTC)

Save our Stages

There is a lot of excitement regarding the new “Save our Stages” program, which will provide grants of up to $15 million for eligible businesses and not-for-profits (including performance venues, independent movie theaters, and cultural institutions) that demonstrate a 25 percent reduction in revenues in 2020. These grants will be administered by the Small Business Administration. Eligible entities will be able to apply for an initial grant that amounts to roughly six months of 2019 gross revenues, capped at $10 million dollars. If funds remain, eligible entities may apply for a supplemental grant of up to 50 percent of the initial grant, with total grant amounts (initial and supplemental) capped at $10 million per grant recipient. Of the $15 billion in the program, $2 billion will be set aside just for venues and creators that employ 50 or fewer full-time employees. Those funds will be broadly available to entities above that threshold if any such funds remain 60 days after implementation of the program begins. Applications for the program should be available within a few weeks (the timing is still up in the air.)

Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential tax impacts and benefits. Visit our COVID-19 Resource Center for more insights or contact Anders below to discuss how the CARES Act affects your not-for-profit organization.

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January 8, 2021

RECORDED WEBINAR – How the New Stimulus Package Will Benefit You and Your Business

Download our recorded webinar to find out how the $900 billion package will provide much-needed COVID-19 relief for families, businesses and industries suffering from the pandemic. 

The Anders CARES Act Team has dissected the 5,500 page bill to give you the answers you need around:

  • Individual stimulus payments
  • The second round of PPP loans
  • The first round of PPP loan forgiveness timing
  • COVID-19 tax relief for businesses and individuals
  • Other COVID-19 relief efforts

Download the webinar below.

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January 6, 2021

How Employers Can Take Advantage of the Expanded Employee Retention Tax Credit

On December 27, 2020 President Trump signed into law a new relief bill in response to the continuing COVID-19 pandemic. The Consolidated Appropriations Act (CAA) is over 5,000 pages in length and contains provisions to fund government operations, provides economic support to individuals and businesses and includes extensive tax law changes. One significant provision focuses on the changes to the Employee Retention Tax Credit (ERTC) originally part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Below we dig into the changes and expansions to the ERTC.

QUICK REFRESHER ON THE ORIGINAL ERTC

Before examining the changes to the ERTC, let’s first revisit the provisions in the original CARES Act. Enacted in the spring of 2020, the Act allowed businesses to take a credit against payroll taxes in order to help offset some of the business losses due to COVID-19. The law allowed eligible employers to take a credit of 50% of qualified wages up to $10,000 paid to employees between March 12, 2020 and January 1, 2021.  Consequently, the maximum credit for each employee was $5,000 ($10,000 in wages X the 50% tax credit rate).

However, not every business was eligible for this credit. Businesses must have been significantly impacted by COVID-19 either by a lockdown order or by experiencing a significant reduction in revenue. There were also restrictions on which wages were “qualified” if an employer employed more than 100 people. Businesses were also not allowed to take the credit if they used Paycheck Protection Program (PPP) loans to cover employee payroll costs. Learn more about the original ERTC under the CARES Act.

UPDATES AND EXPANSIONS TO THE ERTC

The passage of the newly signed relief bill is good news to many businesses who continue to feel the economic impacts of the pandemic as the law enhances and expands many provisions of the original ERTC. To start with, the newly enacted law extends the ERTC until June 30, 2021 and increases the tax credit to 70% of qualified wages for each of the first two quarters of 2021. As a result, the maximum credit for each employee in 2021 is $14,000 ($10,000 in wages X the 70% tax credit rate X two quarters).

ERTC Eligibility

More businesses will be eligible for the ERTC in 2021. The original ERTC was only available for businesses who were forced to shut down or whose gross receipts in 2020 were 50% less than the same quarter in 2019. The new law modifies this reduction in revenue by an additional 30%.  For 2021, the test is satisfied for any of the first two quarters of the year if gross receipts are less than 80% of the gross receipts for same quarter in 2019.

ERTC Wage Threshold

A change in the threshold for determining which wages “qualify” for the tax credit will also benefit employers this upcoming year. Under the old law, for businesses with less than 100 employees all wages qualified for the tax credit, regardless if the employee’s role changed or not due to the pandemic. Whereas businesses with over 100 employees could not claim the credit for employees that were still performing services for the business, even at a reduced capacity. The new law effective January 1, 2021 raises the threshold number to 500 employees. As a result, more wages will become eligible for the tax credit during the first two quarters of 2021.

Employers with PPP Loans

Initially, the CARES Act prohibited employers who had received a PPP loan from also utilizing the ERTC. The new law allows an employer to claim the credit for any wages paid beyond the proceeds of the PPP loan that have been forgiven. This change is retroactive to the effective date under the original law: March 12, 2020. A company that received a PPP loan in 2020 but paid qualified wages beyond the amount of the loan would benefit by filing an amended Form 941 and claiming the credit.

NEW ENHANCEMENTS TO THE ERTC

While many provisions of the CAA enhanced previous law, it also includes some brand new provisions as well. Businesses will now be able to take an advanced payment on their credit even if those wages have not yet been paid. Additionally, some government entities not previously allowed to take the credit are eligible, such as public universities, hospitals, federal credit unions, etc. Another important change is that wages that have been increased due to hazard pay are also now eligible for the ERTC. 

While the above highlights how changes in the recent COVID-19 relief bill have affected the ERTC, please contact an Anders advisor below to discuss your situation and recovery options. Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed. Visit our COVID-19 Resource Center for more resources.

Find out if your business is eligible for the Employee Retention Tax Credit in 2020 or 2021.

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