If you have not looked at the Paycheck Protection Act, now might be an ideal time to explore the option. The Federal Government recently extended the program after $130 billion of the $660 billion program went uncollected. The extension to apply gives businesses affected by the coronavirus pandemic more time to apply for federal funds. The law; recently signed into law by President Trump extends the deadline to apply for the loan-based relief program to August 8. As of June 30, more than 4.8 million loans have been approved totaling $520 billion with the average loan being around $107,000 according the Small Business Administration. The program funds are federally backed low interest loans that businesses can apply for to help cover expenses and maintain worker levels during the pandemic. The money can be used for rent and electricity as well. Though these start as loans, businesses can meet specific criteria from SBA that would later allow the loans to be forgiven. A broad range of businesses have applied for and received these loans.
If you have not applied for a loan through this program because at some point you were told you were not eligible, it would be a good idea to look at this loan option again. If you were denied the loan earlier in the year, try applying again. If you have already, received the loan, you are ineligible to apply again for this particular stimulus package. Be aware that you cannot claim an employee retention tax credit under the IRS rules if you have received PPP loan funds. In addition, the interaction between a PPP loan and the payroll tax credit available under the Families First Coronavirus Response Act (FFCRA) for paying employees during the first fourteen days that they are off work for a COVID-19 related reason is not completely clear at this point. You will want to visit with your tax professional before claiming a tax credit under the FFCRA if you have received PPP loan funds. If Congress were to pass another package in the future, that may open the door for those of who have already received loans this year. It appears the pandemic is going to continue to cause issues for business for the foreseeable future, so keep that in mind when determining your loan amount request. If you are able apply for the loan with a smaller bank or local lender, that may help you expedite the loan process.
More information on SBA loans and the tax credit can be found at:
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options
