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.

All Insights

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
All Insights

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.

All Insights

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.

All Insights

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.

All Insights

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.

All Insights

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.

All Insights

January 5, 2021

PPP2 Loan FAQ: Applying for the Second Round of Funding

The $2.3 trillion Consolidated Appropriations Act of 2021 was signed into law on December 27, 2020 bringing much-needed relief to the country, including a $900 billion COVID-Related Tax Relief Act of 2020 (COVIDTRA). Among the many relief provisions in COVIDTRA, the legislation set aside $284 billion for another round of PPP Loans (PPP2). Under COVIDTRA, PPP2 loans will be available to both first-time qualified borrowers and to businesses that previously received a PPP Loan. Below, we address commonly asked questions about the second round of PPP funding.

When can I apply for a loan?

The Small Business Administration (SBA) has seventeen days after the enactment to issue guidance. Business owners may be able to apply for new PPP loans as early as mid-January.

How much money can I borrow?

A borrower may receive a loan up to 2.5 times the monthly average payroll costs in the 12-month period prior to the loan or in the prior calendar year. For PPP2, businesses in the hospitality industry, which includes accommodation and food services operations with NAICS codes starting with 72, can receive up to 3.5 times their average monthly payroll costs. As with PPP loans, seasonal employers can use alternative calculations to determine their maximum loan amount. The maximum amount of a PPP2 loan cannot exceed $2,000,000.

Who is eligible as a first-time borrower for a PPP2 loan?

If a business did not already apply for and receive the first round of PPP funding, the following first-time borrowers are eligible to receive a PPP2 loan:

  • Businesses with 500 or fewer employees
  • Sole proprietors, independent contractors and eligible self-employed individuals
  • Accommodation and food services operations with NAICS codes starting with 72, such as restaurants and ­­­­hotels, with fewer than 300 employees per location
  • Not-for-profit organizations
  • Must have been in business by February 15th, 2020. This is a new eligibility requirement

If my company previously received a PPP Loan, can I apply for a PPP2 loan?

Businesses that previously received PPP loans can apply for PPP2 loans if they meet the requirements below:

  • 300 or fewer employees
  • Used or will use the full amount of their first PPP loan
  • Can show 25% gross receipts decline in any 2020 quarter compared with the same quarter of 2019

What are the terms of PPP2 loans?

Most of the PPP2 loan terms are similar to the terms of the first round of PPP funding:

  • Loan Amount: Similar to the original PPP Loans, a borrower may receive a loan up to 2.5 times the monthly average payroll costs in the 12-month period prior to the loan or in the prior calendar year. For PPP2 loans, accommodation and food services operations with NAICS codes starting with 72 can receive up to 3.5 times their average monthly payroll costs.
  • Maximum Loan Amount: The maximum amount of a PPP2 loan cannot exceed $2,000,000. This is down from the $10,000,000 maximum amount of PPP loans.
  • Loan Forgiveness: PPP2 loans are also eligible for loan forgiveness. For any loan up to $150,000, the loan will be forgiven if the borrower submits a one-page online or paper form listing the loan amount, number of employees, and the amount spent on payroll. 

How can PPP2 loan funds be used?

Under the original PPP, funds could be used for payroll, benefits, rent, utilities, mortgage interest and transportation costs.

The new bill is expanded and allows for additional expenses, including:

  • Covered operations expenditures – business software, payroll expenses, HR, sales and billing or accounting
  • Covered property damage costs – costs related to property damage due to public disturbances that occurred during 2020 that were not covered by insurance
  • Covered supplier costs – expenses for goods that are essential to the operation and were purchased before the covered period or are perishable goods
  • Covered worker protection expenditures – expenditures related to adapting the business to comply with federal, state, or local government guidelines related to COVID-19 standards of sanitation, social distancing, or any other worker or customer safety
  • Insurance payments – PPP2 clarifies that in addition to group health insurance group life, disability, and vision or dental insurance are included in the payroll definition.

The additional eligible expenses also apply to original PPP loans still outstanding. 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.

How long do I have to spend the PPP2 funds?

Borrowers can choose either an 8 or 24-week period as the covered period of expenses from the loan origination date, similar to the first round of PPP loans. The covered period for both PPP and PPP2 loans begins on the date the loan proceeds are received by the borrower and ends on a date selected by the borrower that falls between 8 weeks after the funds were received and 24 weeks after the date the funds were received. It is not necessarily 8 weeks or 24 weeks for the covered period anymore. We’re awaiting further SBA guidance on how this affects current PPP borrowers who have not yet applied for forgiveness.

Are expenses paid using PPP2 loans tax deductible?

COVIDTRA states that business expenses that would otherwise be tax-deductible, which are paid with forgiven PPP or PPP2 loan proceeds, remain tax-deductible.

Our advisors are closely following COVID-19 relief efforts and will continue to publish more questions and insights to keep you informed. Visit our COVID-19 Resource Center for more resources. 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.

Nicholas E. Dall was a contributor to this post.

All Insights

December 28, 2020

New $900 Billion Pandemic Relief Package Includes Additional Stimulus Payments, PPP Loans and More

A new pandemic relief bill was recently passed by the House and Senate and signed into law by the President on December 27, 2020. The $900 billion COVID-19 relief package was part of a $2.4 trillion Consolidated Appropriations Act bill signed by President Trump.

As a follow up to the CARES Act, which was the largest federal stimulus package, the new bill will help fund several expiring CARES Act aid programs to help individuals, businesses and schools. While the bill does not allocate aid for state and local governments or provide for business liability protections, Congress expressed that this is a starting point and future bills will be introduced. Below we discuss the major provisions included in the relief package.

$600 individual stimulus payments

The criteria for the stimulus payments is similar to the first round, with full payments given to those making up to $75,000 for individuals and $150,000 for married filing jointly. Phaseouts equaling $5 for every $100 of Adjusted Gross Income (AGI) beginning at $75,000 for individuals and $150,000 for married filers. Individuals making $87,000 or more and $174,000 for those married filing jointly would not receive a payout. An additional $600 will be provided for each dependent child under the age of 17. This appears to still make college students ineligible for the stimulus payments if they are claimed as dependents.

The House has indicated they will be introducing a bill to potentially increase stimulus payments to as much as $2,000. Stay tuned on if and when the bill moves to the next level.

$284 billion for another round of PPP loans and small business funding

The package extends the Paycheck Protection Program (PPP), expanding eligibility for local newspapers, broadcasters and not-for-profit organizations. The extension allocates another $20 billion to small business grants and $15 billion to live event and cultural venues.

Highlights of the next round of PPP loans:

  • A second round of PPP loans are available for businesses that experienced 25% or more reduction of gross receipts in any 2020 calendar quarter compared to the same quarter of 2019. Companies with 300 or less employees will qualify.
  • Expanded eligible non-payroll costs to include:
    • Worker protection equipment
    • Supplier costs
    • Property damage
    • Operating expenses
  • Similar to the first round, the loan amount will equal 2.5x average monthly payroll costs, except for the restaurant and hospitality industries, which can apply for 3.5x average monthly payroll costs
  • Economic Injury Disaster Loan (EIDL) advances/grants are no longer subtracted from loan forgiveness amount and are no longer treated as taxable income
  • PPP loans up to $150,000 will be forgiven with a new one-page form including the loan amount, number of employees retained and payroll percentage.

Deductible expenses for payment of covered costs

The Act allows business owners to deduct expenses paid with forgiven PPP loan funding. This would give small business a much-needed tax break, overriding an IRS decision so businesses can claim 100% of deductions on rent, wages and more. The deduction applies to all PPP loans, regardless of if the loan has already been forgiven.

Extension of credits for paid sick leave

Families First Coronavirus Response Act (FFCRA) paid sick leave and family leave tax credits are extended through March 31.

$30 billion for vaccine distribution 

With the vaccine ready for distribution, the aid package directs $30 billion for procurement and distribution throughout the country.

$300 weekly federal unemployment assistance 

An expansion of federal unemployment assistance was included, providing an additional $300 per week for those on unemployment. This amount is down from the $600 passed by the CARES Act and would span for 11 weeks, from the end of December through mid-March. This relief is not retroactive.

Extension of rental assistance and eviction moratoriums

The bill allocates $25 billion in emergency rental assistance for those who lost their source of income due to COVID-19. It also extends the eviction protection another month to January 31.

Additional school funding

$82 billion is laid out for K-12 schools and colleges for heating and cooling system upgrades to fight against virus transmission. An additional $10 billion is allocated for childcare assistance.

These funding categories are just a few of the provisions included in the stimulus bill. There are many smaller provisions, including a new “three martini” tax deduction for business meal expenses, a U.S. Postal Service grant and more.

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. To discuss your situation and recovery options, contact an Anders advisor below.

All Insights

November 19, 2020

RECORDED WEBINAR – The PPP Loan Forgiveness Gates Have Opened: Are You Equipped to Apply?

Download our recorded webinar to hear from the Anders CARES Act Research and Response Team on new details of PPP loan forgiveness you need to know before applying.

The recorded webinar covers the recent Small Business Administration (SBA) guidance on PPP loan forgiveness and insights on:

  • How to work with your bank now that the application portals are open
  • SBA Necessity Questionnaires Forms 3509 and 3510 
  • Strategies for achieving maximum loan forgiveness

Download the webinar below.

All Insights

Keep up with Anders

Want to keep up with all the latest insights from Anders? Subscribe and receive the information that matters to you.

  • This field is for validation purposes and should be left unchanged.