After PPP – Other Options to Get Your Business Through COVID-19

By Candice Caruso | Published: May 2020

By now, the dust has mostly settled with the CARES Act’s Paycheck Protection Program (PPP) application process. Millions of businesses throughout America have received PPP approvals and funding to help cover payroll and other eligible costs.

The PPP program was just one option available to small businesses, with other programs available from the CARES Act to help with more than just payroll. Thankfully, these additional options can help your small business during the pandemic and beyond.

If you have a PPP loan, don’t forget about the forgiveness requirements
Generally, SBA guidance calls for PPP loans to be 100 percent forgiven if funds are used for payroll costs, interest on mortgages, rent, and utilities. However, 75 percent of the funds must be used for payroll for the loan to be fully forgiven, and forgiveness will be reduced if full-time headcount declines or if your business reduces wages and salaries.

Make sure you document all expenses using PPP loan funds, including payroll details, mortgage or rent payments, and utilities expenses. Also, check with your lender to ensure they do not require anything additional to apply for loan forgiveness.

Finally, make sure you use the funds within eight weeks of the date your PPP loan was funded. Check with your lender in a few weeks for more details since they are still waiting on guidance from the SBA.

Details may change, so refer to the SBA’s website for full guidance, updates and additional information.

Consider the Express Bridge Loan and Economic Injury Disaster Loan Advance programs
Whether you received a PPP loan or not, SBA 7(a) loans and Express Loans have been enhanced through the CARES Act, including fast turnarounds, extended repayment times and higher eligible loan amounts.

The Express Bridge Loan Pilot Program provides small businesses quick access to up to $25,000, provided they have a current relationship with a SBA Express Lender. These loans are designed to help small businesses that have an urgent need for cash while waiting for a decision and disbursement on an existing Economic Injury Disaster Loan (EIDL) application. These can be term loans or can be repaid in full or in part by proceeds from the EIDL loan.

Keep in mind that if you are also applying for a new EIDL loan, SBA is currently only accepting applications from agricultural businesses. Check the SBA website often for updates.

Remember, these types of loans are not limited to payroll and other expenses covered by PPP; they can be used to help meet your business’ immediate needs, such as moving, equipment purchasing, inventory and more.

For agricultural businesses that are experiencing temporary revenue losses, the SBA is offering an Economic Injury Disaster Loan (EIDL) Emergency Advance of up to $10,000. Due to limited funds, the SBA is currently limiting these loans to agricultural businesses with fewer than 500 employees, defined by the SBA as “those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).”

Use payroll tax deferrals and credits
While the initial focus on small business payroll needs centered on PPP, additional options are available under the CARES Act for businesses that could not get a PPP loan. For businesses needing a cash flow boost, deferring payroll taxes may be an option. These deferrals are for Social Security employer payroll taxes until December 31, 2020 and are not a part of employee tax withholdings in their paychecks. Even if you did receive a PPP loan, your business may be eligible to use this incentive from now until you receive notification from your lender that your PPP loan has been forgiven.

Keep in mind that these deferments will be due later, so keep cash flow in 2021 and beyond in mind as part of your business continuity planning when considering payroll tax deferrals.

If your business did not participate in PPP, the Employee Retention Credit may be a great option for your business. Designed to help businesses keep employees on their payroll, this refundable tax credit gives businesses impacted by COVID-19 a 50 percent credit, up to $10,000, for wages paid to retained employees.

The guidelines for using payroll tax deferrals and credits are evolving, so we recommend consulting your business’ financial and tax advisors to determine if participating in these programs makes sense for you.

For additional guidance on SBA programs’ current status and requirements, including payment subsidies and other relief for existing loans, visit https://www.sba.gov.

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About the Author – Candice Caruso
Candice Caruso is Senior Vice President, Director of Government Guaranteed Lending at WSFS Bank. She brings more than 20 years of experience in the financial services industry, including 12 years as a business funding expert, and has been featured on Bloomberg Radio, CNBC’s Closing Bell, The Wall Street Journal and Franchising World.