PPP 2.0 & Stimulus Update - January 7, 2021 Date Mark Ferm - Tronconi Segarra & Associates
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Mark Ferm
Partner
Date
SOLUTIONS BEYOND
THE OBVIOUS
PPP 2.0 & Stimulus Update
January 7, 2021
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLP
Notices
This publication has been prepared for general guidance on matters of interest only; it does
not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty
(express or implied) is given as to the accuracy of completeness of the information
contained in this publication; and, to the extent permitted by law, Tronconi Segarra &
Associates LLP, its members, employees and agents do not accept or assume any liability,
responsibility or duty of care for any consequences of you or anyone else acting, or
refraining to act, in reliance on the information contained in this website or for any decision
based on it.
Copyright 2020 Tronconi Segarra & Associates. All rights reserved.
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLP
Today’s Presenters
Thomas E. Mazurek, Jr., CPA Charles P. Pezzino, CPA Daniel A. Spada, CPA
Partner Partner Principal
tmazurek@tsacpa.com cpezzino@tsacpa.com dspada@tsacpa.com
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLP
Agenda
Stimulus Update
Paycheck Protection Program
Employee Retention Tax Credit
Targeted EIDL Advances
Q&A
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLP
Stimulus Update
$41 billion includes: Targeted EIDL
Grants, Shuttered Venue Operator
Grants, SBA Debt Relief, Enhancements
to SBA lending
Stimulus Update
Emergency rental assistance
The CAA, 2021 provides $25 billion for emergency rental assistance
Extends the CDC’s eviction moratorium until Jan. 31, 2021
Eligible renters will be able to receive assistance with rent and
utility payments, unpaid rent or utility bills that have accumulated
since the beginning of the pandemic
Renters will apply for assistance with entities that state and
local grantees selected to administer the program
Once a renter qualifies for assistance, the administering entity
will send the payment directly to the landlord
Property owners can also assist renters to apply for rental
assistance under the program or apply on behalf of the
tenant
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLP
Stimulus Update
Emergency rental assistance
An “eligible household” is defined as a renter household in which at
least one or more individuals meets the following criteria:
1. Qualifies for unemployment or has experienced a reduction in
household income, incurred significant costs, or experienced a
financial hardship due to COVID-19;
2. Demonstrates a risk of experiencing homelessness or housing
instability; and
3. Has a household income at or below 80% of the area median
income (AMI)
* Eligible households may receive up to 12 months of assistance, plus an
additional 3 months if the grantee determines the extra months are needed
to ensure housing stability and grantee funds are available
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPStimulus Update
Direct payments
On Dec. 29, 2020, the IRS and the Treasury Dept. began delivering the
second round of Economic Impact Payments to millions of Americans
who received the first round of payments earlier this year
The initial direct deposit payments began arriving on Dec. 29 for
some and continued into this week
Paper checks began to be mailed on Dec. 30
The IRS emphasizes that there is no action required by eligible
individuals to receive this second payment
Eligible individuals who did not receive an Economic Impact
Payment this year – either the first or the second payment – will be
able to claim it when they file their 2020 taxes in 2021
People can check the status of both their first and second payments by using
the IRS Get My Payment tool
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPStimulus Update
Eligible PPP expenses now deductible
On Jan. 6, 2021, the Treasury Dept. and IRS issued new guidance
allowing deductions for the payments of eligible expenses when such
payments would result (or be expected to result) in the forgiveness of a
PPP loan
Revenue Ruling 2021-02 reflects changes to law contained in the
COVID-related Tax Relief Act of 2020, enacted as part of the
Consolidated Appropriations Act, 2021
No deduction is denied, no tax attribute is reduced and no basis
increase is denied by reason of the exclusion from gross income of
the forgiveness of an eligible recipient's covered loan
Rev. Rul. 2021-02 makes obsoletes Notice 2020-32 and Rev. Rul.
2020-27
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
New guidance
Interim Final Rule (Jan. 6, 2021)
Business Loan Program Temporary Changes: Extension of and Changes
to Paycheck Protection Program “Consolidated First Draw PPP IFR”
Restates existing regulatory provisions to provide lenders and new
PPP borrowers a single regulation to consult on borrower eligibility,
lender eligibility, and loan application and origination requirements
issues for new First Draw PPP loans, as well as general rules relating
to First Draw PPP Loan increases and loan forgiveness.
This rule is not intended to substantively alter or affect PPP rules
that were not amended by the Economic Aid Act.
Additional rules related to second draw PPP loans will be published
separately, and SBA intends to issue a consolidated rule governing all
aspects of loan forgiveness and the loan review process as well.
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
New guidance
Interim Final Rule (Jan. 6, 2021)
Business Loan Program Temporary Changes: Paycheck Protection
Program Second Draw Loans
This IFR applies to loan applications and applications for loan
forgiveness submitted for PPP Second Draw Loans
The key differences between First Draw PPP Loans and Second Draw
PPP Loans are described in this IFR, which explains the loan terms,
eligibility requirements, and application process for Second Draw
PPP Loans.
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
New guidance
Interim Final Rule - Paycheck Protection Program Second Draw Loans
Second Draw PPP Loans are generally subject to the same terms,
conditions and requirements as First Draw PPP Loans.
The IFR provides that a borrower that was in operation in all four
quarters of 2019 is deemed to have experienced the required
revenue reduction if it experienced a reduction in annual receipts of
25% or greater in 2020 compared to 2019 and the borrower submits
copies of its annual tax forms substantiating the revenue decline.
This method will be particularly important for small borrowers
that may not have quarterly revenue information readily
available.
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
New guidance
Interim Final Rule - Paycheck Protection Program Second Draw Loans
Second Draw PPP Loan application and documentation requirements:
The documentation required to substantiate an applicant’s payroll
cost calculations is generally the same as documentation required
for First Draw PPP Loans.
However, no additional documentation to substantiate payroll costs
will be required if the applicant:
i. used calendar year 2019 figures to determine its First Draw PPP Loan
amount,
ii. used calendar year 2019 figures to determine its Second Draw PPP
Loan amount (instead of calendar year 2020), and
iii. the lender for the applicant’s Second Draw PPP Loan is the same as
the lender that made the applicant’s First Draw PPP Loan.
In such cases, additional documentation is not required because the lender already has the
relevant documentation supporting the borrower’s payroll costs.
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
New guidance
Interim Final Rule - Paycheck Protection Program Second Draw Loans
Second Draw PPP Loan application and documentation requirements:
For loans with a principal amount greater than $150,000, the
applicant must also submit documentation adequate to establish
that the applicant experienced a revenue reduction of 25% or
greater in 2020 relative to 2019.
Such documentation may include relevant tax forms, including
annual tax forms, or, if relevant tax forms are not available,
quarterly financial statements or bank statements.
For loans with a principal amount of $150,000 or less, such
documentation is not required at the time the borrower submits its
application for a loan, but must be submitted on or before the date
the borrower applies for loan forgiveness, as required under the
Economic Aid Act.
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
Comparison between PPP 1.0 and 2.0
PPP 1.0 PPP 2.0
Any business concern, certain nonprofit Any business concern, certain nonprofit
organizations, veterans organizations, organizations, housing cooperatives,
tribal businesses, eligible self-employed veterans organizations, tribal businesses,
individuals, sole proprietors, eligible self-employed individuals, sole
independent contractors or small proprietors, independent contractors or
agricultural cooperatives that: small agricultural cooperatives that:
Was in operation on Feb. 15, 2020; Was in operation on Feb. 15, 2020;
Eligible
Employs not more than 500 Employs not more than 300
Borrowers
employees or meets SBA size employees;
standards Have used or will use the full
Expanded to include 501(C)(6) amount of their first PPP loan;
organizations and housing Experienced a 25% reduction in
cooperatives with less than 300 gross receipts in any quarter of
employees, certain news 2020 compared to the same
organizations quarter in 2019
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
Comparison between PPP 1.0 and 2.0
PPP 1.0 PPP 2.0
The Maximum amount of a covered loan The Maximum amount of a covered loan
made to an eligible entity is the lesser of: made to an eligible entity is the lesser of:
2.5 times the average total 2.5 times the average total
Maximum monthly payroll costs incurred or monthly payroll costs incurred or
Loan paid by the eligible entity during paid by the eligible entity during
Amount calendar year 2019 either (1) the 1-year period before
$10,000,000 the date on which the loan is
made or (2) calendar year 2019
$2,000,000
The maximum amount of a covered loan for eligible entities with a NAICS codes starting with
72 (accommodation and food services) is 3.5 times the average monthly payroll costs
Seasonal employers can use any 12-week period between Feb. 15, 2019 - Feb. 15, 2020
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
Comparison between PPP 1.0 and 2.0
PPP 1.0 PPP 2.0
Either the 24 week period beginning on Begins on the date of the origination of a
the PPP loan disbursement date or if the covered loan ands ends on a date
borrower received its PPP loan before selected by the Borrower that occurs
Covered
Jun. 5, 2020, may elect to use 8 week during the period beginning 8 weeks and
Period
period ending 24 weeks after the date of
origination of the covered loan
Covered period for all PPP loans
extends thru Mar. 31, 2021
Payroll costs – salary/wages, employee Same Payroll costs as 1.0 plus group life,
benefits, state and local taxes assessed on disability, vision or dental insurance
compensation
Allowable Same Nonpayroll costs as 1.0 plus:
Uses of Nonpayroll costs – covered mortgage Covered operation expenditures
PPP Funds interest, rent, utilities Covered property damage costs
Covered supplier costs
Covered worker protection
expenditures
60/40 allocation between payroll and nonpayroll costs continues to apply
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPaycheck Protection Program
Good faith certification
An eligible recipient applying for a covered loan is still required to
make a good faith certification:
That the uncertainty of current economic conditions makes
necessary the loan request to support the ongoing operations of
the eligible recipient
Acknowledging that funds will be used to retain workers and
maintain payroll or make mortgage payments, lease payments,
and utility payments
The CAA has not updated the above certification to
include newly eligible costs
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPEmployee Retention Tax Credit
Comparison between CARES Act and CAA
CARES Act CAA, 2021
Applicable Time Period Qualified wages paid after Mar. 12, Qualified wages paid after Mar. 12, 2020
Credit is Available 2020 and before Jan. 1, 2021 and before Jul. 1, 2021
Effective Jan. 1, 2021, Businesses with
Businesses with operations that operations that were either (1) fully or
were either (1) fully or partially partially suspended by a COVID-19
suspended by a COVID-19 governmental order or (2) gross receipts
Eligibility
governmental order or (2) gross declined by 20% compared to gross
Requirements
receipts declined by 50% compared receipts in the same quarter in 2019
to gross receipts in the same (also provides safe harbor in which
quarter in 2019 business can use prior-quarter gross
receipts to qualify for the credit)
50% of qualified wages paid to Effective Jan. 1, 2021, 70% of qualified
Percentage
employee plus cost of health wages paid to employee plus cost of
of Wages
benefits health benefits
Effective Jan. 1, 2021, capped at $7,000
Maximum Credit Capped at $5,000 per employee per employee ($10,000 x 70%) for each
Amount ($10,000 x 50%) annually of the first 2 quarters of 2021 (possible
$14,000 credit per employee)
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPEmployee Retention Tax Credit
Comparison between CARES Act and CAA
CARES Act CAA, 2021
Businesses > 100 employees cannot
Effective Jan. 1, 2021, the threshold
take the credit for wages paid to
increases to 500 employees
employees performing services
Employer Size – whether
(even at reduced capacity)
employee is working or An employer < 500 employees will
Businesses < 100 employees can
not now be eligible to claim the credit,
take the credit for wages paid to
even if employees are performing
employees performing services or
services
employees who are not working
For 2021, the IRS is expected to
draft guidance to allow an advance
For 2020, there were no provisions payment of the credit for
Advance Payments to receive credit before qualified businesses with < 500 employees,
wages were paid based on 70% of the avg. quarterly
payroll for the same quarter in
2019
Limitations on The credit is allowed for hazardous
No credit for pay rate increases
Hazard Pay duty pay increases
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPEmployee Retention Tax Credit
Retroactive changes
Clarifies that group health care plan expenses can be considered “qualified
wages” even when no other wages are paid to the employees
Clarifies the determination of gross receipts for certain tax-exempt
organizations by reference to section 6033 of the IRC
Provides that businesses who received a PPP loan in 2020, and who are
otherwise eligible, should be able to file amended employment tax returns to
claim the ERTC with respect to qualified wages paid in excess of the amount
that were paid with a forgiven PPP loan (no double dipping)
The IRS is expected to issue guidance on how to claim the credit retroactively
on the fourth quarter Form 941 (due Feb. 1, 2021) or by filing amended returns
later
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPEmployee Retention Tax Credit
Significant decline in gross receipts (2020)
A significant decline in gross receipts begins:
on the first day of the first calendar quarter of 2020
for which an employer’s gross receipts are less than 50% of its gross
receipts
for the same calendar quarter in 2019.
The significant decline in gross receipts ends:
on the first day of the first calendar quarter following the calendar
quarter
in which gross receipts are more than of 80% of its gross receipts
for the same calendar quarter in 2019.
The credit applies to qualified wages (including certain health plan expenses) paid during this
period or any calendar quarter in which operations were suspended
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPTargeted EIDL Advances
Eligible applicants
Eligible applicants include:
Businesses, cooperatives or agricultural enterprises with 300 or
fewer employees, most private nonprofits, faith-based
organizations, sole proprietors, independent contractors or
businesses defined as small per SBA size standards;
Suffered an economic loss of greater than 30%;
Gross receipts must have declined at least 30% during an
8-week period between Mar. 2, 2020 – Dec. 31, 2021,
relative to a comparable 8-week period immediately
preceding Mar. 2, 2020, or during 2019; and
Located in a low-income community as defined for the new
markets tax credit (NMTC) in section 45D(e) of the IRC
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPTargeted EIDL Advances
Eligible applicants
The term “low-income community” means any population census
tract if —
A. the poverty rate for such tract is at least 20%, or
B. (i) in the case of a tract not located within a metropolitan
area, the median family income for such tract does not
exceed 80% of statewide median family income, or
(ii) in the case of a tract located within a metropolitan area,
the median family income for such tract does not exceed
80% of the greater of statewide median family income or the
metropolitan area median family income
Use the CIMS mapping tool to search by address, census tract or
other geographic area of interest to determine program eligibility
for NMTC
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPTargeted EIDL Advances
Eligible applicants
Also permits eligible small businesses in low-income communities
that previously received an EIDL advance under the CARES Act to
receive additional funds, up to $10,000
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPStimulus Relief
Example
Central Perk is a coffee shop and retailer located in Buffalo, NY. It’s business has
been negatively impacted by the pandemic, including restrictions imposed by
New York State
Year Q1 Q2 Q3 Q4 Total
2019 250,000 275,000 225,000 250,000 1,000,000
2020 250,000 100,000 125,000 125,000 600,000
2021 150,000 200,000
The business received a PPP loan for $62,500 in 2020 and has not yet
applied for forgiveness with its lender. The owner also spent $5,000 on PPE
and social distancing-related improvements in 2020.
The business received an EIDL advance (2020) for $4,000 (for 4 employees)
What new stimulus relief can Central Perk take advantage of in 2021?
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPPPP Loans
CPA Business Funding Portal
The AICPA, CPA.com and fintech leader Biz2Credit have launched a
platform for CPA firms, to help practitioners guide small businesses
through the PPP loan process, from applying for new PPP 2.0 loans to
calculating loan forgiveness, integrated with data imports for bank
statements and payroll and the latest PPP guidance from the AICPA
Tronconi Segarra & Associates LLP can provide
an end-to-end PPP solution for your business,
including:
Determine PPP 2.0 loan eligibility
Process loan application thru Biz2Credit
Prepare loan forgiveness application
Call 716.633.1373 or email us at COVID19team@tsacpa.com
for more information about these services
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPUpcoming Webinars
COVID-19 Panel of Experts:
Live Q&A with HR, Legal and Accounting
Thursday | Jan. 14, 2020 | 10am
Register
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPContact us
If you have additional questions:
Visit our COVID-19 Resource Center
https://www.tsacpa.com/coronavirus-covid-19-resource-center/
Email our Response Team
covid19team@tsacpa.com
Follow Tronconi Segarra & Associates on for updates on the latest COVID-19 developments
SOLUTIONS BEYOND THE OBVIOUS PRESENTED BY TRONCONI SEGARRA & ASSOCIATES LLPtsacpa.com
This publication has been prepared for general guidance on matters of interest only; it does
not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty
(express or implied) is given as to the accuracy of completeness of the information
contained in this publication; and, to the extent permitted by law, Tronconi Segarra &
Associates LLP, its members, employees and agents do not accept or assume any liability,
responsibility or duty of care for any consequences of you or anyone else acting, or
refraining to act, in reliance on the information contained in this website or for any decision
based on it.
Copyright 2020 Tronconi Segarra & Associates. All rights reserved.
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