This past Wednesday, February 17th 2021, I was honored once again to participate in State Representative Will Guzzardi’s FREE Facebook Live series designed to help his constituents — and anyone else who wants to tune in — to learn about financial relief during Covid-19.
The full-length webinar is FREE, as are the slides, resources and links to walk you through the application process. Additionally, a PDF version of the slides is available for download here:
We covered the following topics: 1) Paycheck Protection Program Summary 2) Current Program Overview 3) Eligibility 4) How To Apply 5) Where To Apply 6) Forgiveness Basics 7) Resources & Questions
Please share far and wide to help small business owners learn about the current status of the Paycheck Protection Program and how they can determine eligibility and apply for a non-taxable forgivable loan to help their companies stay afloat during these challenging times.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
January 11, 2021: The next round of the popular Paycheck Protection Program technically opens today — but only for a very small number of lenders, called Community Financial Institutions. According to CPA Practice Advisor, “To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.”
In the finance industry, this is being referred to as the “Soft Launch” of the PPP. The reason for this tiered approach is that these institutions (CFIs), and the disadvantaged businesses they often represent — many of them from underserved communities — were mostly shut-out of the first round of PPP back in April. Brian Thompson published a great article in Forbes yesterday, explaining the details, that I encourage you to read. In short, the SBA is trying to equalize access to business ownership and support for black and brown communities. So if you’re not in one of these groups, today’s opening is not meant for you. Please be patient.
Although only this small group of lenders will be the included in the Soft Launch, unfortunately very few of them will be prepared to take full loan applications this week. These CFIs are generally only accepting applications from their existing customers, and do not have the processing capacity to receive an influx of applications, especially from those outside the communities they serve.
My recommendation is to continue with the strategy that you have already devised — whether that’s working with your existing banking relationship, or with your CPA to apply through a lending portal (I am using the CPA Business Funding Portal, a joint program between the AICPA and biz2credit — more here — you can also use the platform for free to help prepare applications to be sent to clients’ existing lenders).
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.
Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
Key PPP updates include (underlines are mine):
PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations;
The PPP provides greater flexibility for seasonal employees;
Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
Has no more than 300 employees; and
Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. (Updated since to provide an option for annual comparison for those without quarterly records.)
The guidance included two interim final rules (IFRs).
The 82-page IFR “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended” consolidates the rules for PPP forgivable loans for first-time borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260.
The 42-page IFR “Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans” lays out the guidelines for new PPP loans to businesses that previously received a PPP loan.
In addition, the SBA released a three-page “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns.” That guidance includes a commitment from the SBA to make at least the first two days of the PPP application window open exclusively to applications from community financial institutions that serve minority- and women-owned businesses.
AICPA Firm Services Vice President Lisa Simpson got up at 5 am on the morning the SBA guidance was released, and was ready by 3 pm — slide deck and all — to share it with us on the AICPA Town Hall. The hour-long episode is free and available to the public — it’s all excellent, but her presentation in the first half-hour will give you almost everything you need to know. I’ll attempt to summarize it here, but honestly… you’re doing yourself a favor to sit down and watch it.
Here’s a summary of what I consider to be the highlights:
SBA program will open January 11, in phases, as outlined above (minority-owned businesses were the last to receive assistance first-time around).
March 31st is last day to apply for PPP (first- or second-round).
For payroll costs used in calculating the loan amount (x 2.5 months, or x 3.5 for the hospitality industry, including restaurants), one can use: a) 2019, b) 2020, or c) 12-months’ prior to application.
Borrowers that want a 2nd PPP must show a 25% quarterly revenue loss in any quarter of 2020 compared to the same quarter in 2019 (or annual, see below). The SBA is streamlining this for loans under $150k. It will not require supporting documentation to be submitted with the application but only later, when applying for forgiveness.
Businesses trying to show the quarterly 25% revenue drop for 2nd PPP loans can cite an annual reduction of 25% and submit copies of annual tax forms to verify. SBA and Treasury say this will help small borrowers that may not have quarterly revenue information readily available.
For details on both first-draw and second-draw maximum loan amounts and eligible costs, this Journal of Accountancy article is the best summary I have read so far.
The AICPA has been very generous in encouraging us to share its slides from the Town Halls in order to get the word out. Here are a few “best of” from Thursday’s session. Again, I encourage you to watch for yourself to get some clarity.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
UPDATE 3/9/21: See this informative blog post written by a colleague of mine for recent updates to the program, application process, required documentation, etc. An important reminder that applicants are required to register for a DUNS number on the SAM.gov website prior to applying — and it takes up to two weeks to process.
It’s big news that Consolidated Appropriations Act of 2021 (CAA) — the newest financial relief legislation — included a provision of grants for shuttered venue operators, originally known as the Save Our Stages Act. They set aside $15 billion to help these organizations, regardless of entity type.
I’ve recently received some questions that make it clear that folks don’t really understand how this program is distinct from others, and I wanted to clear up some confusion: 1) The reason live venues cannot receive PPP2 funds is that the Shuttered Live Venue Grant program is its substitute, built specifically for these types of organizations and industry. 2) It will be phased in over the course of a month — two weeks for the hardest hit, then two more weeks for the next-hardest hit, then it opens up to any other qualifying businesses. (This is generally not the case for other grants or credits, like PPP or ERC. Each has its own rules.)
To clarify, the grant program is not yet live and we do not yet know at what point the funds will be available.
But as is the case with all the other financial relief I’ve been covering, what’s important is to get as ready as you can be NOW, so that the moment guidance is released, forms come out, and the program goes live, you’re on it.
I’m going to start by encouraging you to read two articles — one is from Withum, a trusted accounting firm with a team that specializes in this industry. It’s to-the-point, instructional, and a solid reference.
The other is no surprise: my favorite tax writer, Tony Nitti, breaks it down and explains the details like few others can, with analysis and humor. If you actually intend on applying for one of these, skip the rest of my post and just switch to his most recent Forbes article. My post is simply a summary of his article, for those who aren’t sure if they might be interested and just want to learn about the basics.
And with that… there are three types of requirements: qualifying category; business requirements; and venue requirements. His article lists them in detail, but as a summary:
I. Qualifying Category Requirements
Category 1: Live venue operators or promoters, theatrical producers, or live performing arts organization operators a) Organize/Promote/Produce/Manage/Host Life Performances b) Ticket Brokers
Category 2: Relevant Museum
Category 3: Motion Picture Theater Operator
Category 4: Talent Representative
II. Business Requirements
1. It must have been fully operational on February 29, 2020; 2. Had a 75% of gross revenue during any quarter of 2020 over the same quarter in 2019; 3. Intends or has resumed operations (requirements differ based on which category); 4. Cannot be publicly traded or have received more than 10% of its revenue during 2019 from federal funding; 5. Cannot have MORE THAN TWO of the following characteristics: – Locations in more than one country, – Locations in more than 10 states, or – More than 500 employees as of February 29, 2020. 6. No strip clubs; 7. Cannot receive a Paycheck Protection Program loan — either round 1 or the new second round — after December 27, 2020.
III. Venue Requirements Depending on the category, there are specific requirements that the venues have certain characteristics, such as a defined performance and audience space, as well as paid ticket or cover charges. Again, see the article for a detailed list by category.
Once a business meets ALL the relevant requirements above, it is eligible to receive a grant.
Grant Amount Calculation
The initial grant will generally be equal to the lesser of three amounts: 1. 45% of the gross earned revenue of the business during 2019; 2. If the business started after January 1, 2019, the amount equal to the product of 6 multiplied by the average monthly gross earned revenue for each full month the business was in operation in 2019; or, 3. $10 million.
The grants will be prioritized: for the first 14 days they are available, grants will be awarded to those with a 90% drop in revenue compared to the same period in 2019. The next 14 days will prioritize those businesses who lost at least 70% of revenue when comparing the two periods.
Each qualifying business — even if affiliated with other businesses –- is eligible for its own grant. However, no more than 5 business entities of any “affiliated group” can receive a grant. For museums, the maximum grant for any one museum operator is $10 million, regardless of the number of museums operated.
A supplemental grant is also available if the revenues for the first quarter of 2021 are at least 70% less than the revenues for the same quarter in 2019. It will be 50% of the initial grant, but between initial and supplemental grants, the total amount received cannot exceed $10 million.
The grant dollars must be used for costs incurred from March 1, 2020 through December 31, 2021 (or as late as June 30, 2022 for supplemental grants). If not expended by the relevant deadline, the funds must be returned within 1 year after the date of disbursement of the grant.
The grants must be used on eligible expenses, including: payroll costs, mortgage interest, rent, utilities, worker protection expenses, independent contractors (up to $100,000 in annual compensation each), maintenance, administrative costs, state and local taxes, operating leases, insurance premiums, advertising, production transportation, and certain capital expenditures.
Receipt of the grant is not taxable — the grant represents tax-exempt income; and 2) any expenses paid with the grant money is fully deductible.
Again, thank you Tony — and best of luck to any of you out there who qualify; we can’t wait until the pandemic is over and we’re back in your halls again.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
The Business Interruption Grant (BIG), a program available through the Illinois Department of Commerce and Economic Opportunity (IDCEO), continues to actively seek applicants, in order to effectively disburse the full amount awarded to the state program. It leverages federal funding provided by the CARES Act to provide economic relief for small businesses hit hardest by COVID-19. The state received $540 million for BIG from the federal Coronavirus Aid, Relief & Economic Security Act, of which $270 million was earmarked for small businesses, according to Lauren Huffman, a spokeswoman for the Illinois Department of Commerce & Economic Opportunity. Applications are live now.
The first round of BIGs provided $49 million to businesses such as restaurants, personal care services, gyms and fitness clubs, and businesses located in “Disproportionately Impacted Areas” (DIAs). A list of awardees is available here.
The second round of BIGs will provide $220 million to “businesses downstate, in disproportionately impacted areas (DIAs), and for heavily impacted industry and regions – representing businesses that have been unable to reopen or operating at a severely diminished capacity since the spring.” A discussion of the program, outlining the various types of prioritized and eligible businesses, as well as eligible costs, is in an earlier blog post, here.
To summarize, Round 2 includes: – $60 million for heavily impacted industries, such as movie theaters, performing arts & concert venues, indoor recreation, amusement parks.* – $70 million for disproportionately impacted areas, defined by zip code for communities that are most economically distressed and vulnerable to COVID-19. – More than $100 million for downstate communities. – $5 million for livestock production disruptions. (Applications available from the Illinois Department of Agriculture.) – Loan Forgiveness for Illinois small business emergency loan recipients.
*In addition to the $60 million for heavily impacted industries, the following types of businesses are being prioritized:
Businesses directly affected by regional mitigations implemented by state or local governments.
Independently owned retail.
Tourism- and hospitality-related industries.
(Businesses outside the categories listed above are also eligible to apply and receive funding under the program but may be reviewed later than priority businesses. Assistance with applications is available at no cost.)
However, as I started to see media coverage touting the benefits to independent retail, and promoting the program, trying to drum up applications, I began to be concerned for my own clients — many of them have received grants, to be sure, for which we are immensely thankful — but they were all in the hospitality industry, or in a DIA. To-date, not a single retail client has received any BIG funds. And since the program says that all businesses will receive a decision on their grant application within four to six weeks of application submission, I was frustrated to see that many of my clients had not heard anything, and yet new articles such as this were frequently coming my way, where my own state rep, Will Guzzardi, was saying the program did not have enough applicants. (Block Club was reporting the same story.) I reached out to colleagues in accounting, bookkeeping, law, and to chambers of commerce and heard the same story — small retailers were not receiving Business Interruption Grants.
So I contacted Rep. Guzzardi to find out what the story was, and he was, as usual, interested in the discrepancy between what he had been told and the actual experiences of small business owners. He took my questions to the state and came back with some solid explanations and more encouragement.
For starters, the state is reviewing applications in three categories: DIAs, downstate Illinois applicants, and disproportionately impacted industries — restaurants, bars, venues, etc. If an application doesn’t fall into one of those categories, it’s probably being moved further down the queue. But that doesn’t mean anything about their likelihood of getting a grant. It just means that they’ll be reviewed later in the process.
They evaluate every application first on the basis of whether or not they meet the basic eligibility criteria, and then based on how many of these criteria they meet:
Directly impacted by regional mitigation to prevent the spread of COVID 19, based on applicant industry and county
Has not received any other emergency funding, e.g. in the form of PPP or other state or local grants
Has under $5 million in annual revenue
Located in a disproportionately impacted area (DIA)
Located in a “downstate” county
Operate in a priority industry, including the following: ○ Independently-Owned Retail ○ Restaurant ○ Bar or Tavern ○ Gym or Fitness Center ○ Tourism and Travel ○ Support Service of Arts or Events
Then they conduct separate lotteries based on how many of those criteria you met. So if you meet 6/6, you’re in a lottery group with very good odds. If you only meet one or two, your lottery is less likely. If you don’t win your lottery, your application is held over into the next lottery batch.
BIG Round 1 didn’t go to retailers at all. In Round 2, retail is in a pretty large pool with bars, restaurants, gyms, museums, etc., and so they’re just facing slightly longer odds, especially if they’re not in a DIA or downstate.
The message to retail folks is: if you applied, your application is still in the lottery — just because it hasn’t come up doesn’t mean it won’t. I expect the state is just trying to make sure those who are hardest hit have the best chance at the grants, and then they’ll turn their attention to independently-owned retail and the other eligible business types.
It is not too late to apply!
Join the Illinois Department of Commerce & Economic Opportunity (DCEO) for an informational webinar regarding the Business Interruption Grant (BIG). Attendees will learn about eligibility criteria, required documentation and step-by-step instructions for the online application. DCEO representatives will be available to answer your questions and all attendees will receive a copy of the presentation materials with direct links to the BIG program portal, FAQs and contact information for DCEO representatives who are available for 1-to-1 technical assistance, if needed.
And I know I’ve shared this link countless times by now, but honestly, it is an amazing source of information on applications, evaluation criteria, assistance, eligible costs, and so much more.
For the clients who have received this grant, it has been a lifeline. It’s much more flexible than the PPP, it’s a grant rather than a loan like the EIDL, and it’s built for small business. The application is not a particularly challenging one. If you are a small business struggling due to the pandemic, you owe to to yourself to give this one a try.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
As Republicans in Congress refuse to pass further relief packages for those hit hardest by COVID-19, Chicago announced a new fund to help struggling local performing arts spaces — as it’s currently estimated that 90 percent of live music venues won’t survive without additional support, reported Block Club.
Venues can apply for up to $10,000 from the Performing Arts Venue Relief Program, funded in part by the Walder Foundation and the Arts for Illinois Relief Fund, and in partnership with Accion. The city said 120 eligible applicants will be randomly selected by lottery for the relief grants.
Eligibility criteria and applications are available at chicago.gov/artsvenuerelief — the application deadline is October 23 at 5pm Central. Grant recipients will chosen via lottery and notified of their acceptance on November 16th.
The program will prioritize funding organizations located on the South and West sides, in LMI (Low and Moderate Income) community areas, organizations that were not eligible for the City of Chicago’s Together Now program, and organizations that have not received grants through the Arts for Illinois Relief Fund, the City of Chicago’s Together Now program, or the 2020 CityArts Large program for organizations with budgets over $2M.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Gusto is my favorite company to work with for so many reasons… but it just got better as I have been watching how much effort they’ve put into researching cash flow options for their small business clientele.
I’ll be circling back to this list soon to explore these in an order that I think makes most sense for my client base; I’ve also emailed them about some City of Chicago and Cook County resources that should be added to the list.
But in the meantime, please check out their downloadable list of Federal, State, and Private resources for relief, loans and grants available to small businesses.
As they mention in the post:
This spreadsheet will regularly be updated with financial resources for small businesses. Check back for the most up-to-date information, and share it with a business owner who may benefit from the support.
We’ll also be creating similar resources for unemployment benefits and sick leave. Visit the Talk Shop homepage for our latest publications, and see our COVID-19 employer guide for more helpful info.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
