Relief Programs for Small Businesses
It has been nearly a year and a half since the pandemic began and while many businesses are beginning to see things start to return to normal there are many other small businesses that are still struggling because of the pandemic. For those business that were negatively impacted by the pandemic several programs have been launched to provide those business with some additional financial support. Many of these programs for small businesses were a part of the various stimulus packages that were created throughout 2020 and the early part of 2021. Along with the stimulus payments for qualifying individuals, there were programs created specifically to help small businesses deal with the impact of the pandemic. While many of these programs are based on wages paid to employees, the actual money provided by the programs in some situations can be spent on other necessities to continue business operations.
Payroll Protection Program Loan
First, there was the Payroll Protection Program Loan. This loan had a first draw and possibly a second draw if your business experienced a decrease of 25% in revenue. These loans could possibly be forgiven and not taxed by the federal government. Taxation can vary from state-to-state. They required an approved application based on spending requirements, mostly tied to payroll.
Shuttered Venue Operators Grant / Restaurant Revitalization Fund
Depending on the industry or nature of your operations, some businesses also qualify for the Shuttered Venue Operators Grant or the Restaurant Revitalization Fund. The Shuttered Venues Grant is meant for those businesses that host live events, such as concerts, and were not able to be hold those events over the past year. This grant does have an order of priority which is determined based on the magnitude of the revenue loss experienced by the venue from April 2020 – December 2020. If a business received a PPP Loan, it may reduce the amount of the grant for the business.
Restaurants, food carts and trucks, bars, saloons, bakeries, breweries, wineries and other businesses whose on-site sales comprise 33% of their revenues could qualify for the Restaurant Revitalization Fund. The purpose of this loan is to account for lost revenues from 2019 to 2020 based on the business’s tax returns but are reduced for any PPP Loans received. Both programs have requirements on how the funds are to be used and there can be additional reporting required in order to meet the requirements of these programs.
Employee Retention Credit
The final program is the Employee Retention Credit (ERC). The ERC is different than the previous programs because there is no application that needs to be completed and it is not submitted to a bank or the Small Business Administration (SBA). The Employee Retention Credit is something a business can qualify for if either of the following occurred for 2020.
1) Gross Receipts decrease of 50% when compared to 2019
2) The business was fully or partially suspended by a government order due to COVID-19 during the calendar quarter.
If either of those situations occurred and the business has less than 100 full-time employees, wages paid during those specific periods could be eligible for a credit of 50% on a maximum of $10,000 of wages per employee. The $10,000 figure for 2020 is the full-year maximum. However, in 2021, there are a few changes, the first one being that you only need to experience a 20% decrease in gross receipts when compared to 2019, and the second is the eligible wages are $10,000 per quarter and a 70% credit on those wages.
Understanding and coordinating all these programs can be an overwhelming task since each business’s situation is unique and could have a different plan when it comes to combining these relief opportunities. If you think your business could benefit from a discussion on any of the above programs, please reach out to Advisors Management Group today at (800) 488-4032 and ask to speak with a member of our Consulting Team.
Tax Manager, Investment Advisor Representative, Tax Preparer
Adam joined the Advisors Management Group team in December 2015 and is now the Director of Accounting and Consulting. He has worked extensively in the accounting industry as an Assistant Controller and a Senior Accounting Analyst before coming to Advisors Management Group.