SBA Targeted EIDL Advance and the Supplemental Targeted Advance

SBA Targeted EIDL Advance and the Supplemental Targeted Advance

 

As small businesses all across the country attempt to reopen and recover from the pandemic, the SBA has expanded its reach in the form of an Targeted EIDL Advance and a Supplemental Targeted Advance.

The first thing to know is, if the business did not apply for the EIDL advance in 2020, the business is not a candidate for either the EIDL Targeted Advance or the EIDL Supplemental Targeted Advance.

If the business did apply for the EIDL before December 27, 2020, then it is a candidate to potentially receive the Target Advance and/or the Supplemental Advance. Each requires that the SBA send an email inviting the business owner to apply for these programs.

In addition, both also require the business to be located in a low income community. The SBA has set up a web-based mapping tool to help determine whether the business is in one of the required low income communities or not. If it is, the EIDL Targeted Advance is for those businesses that have 300 or less employees and have at least a 30% drop in gross receipts in any 8-week period.

To qualify for the EIDL Supplemental Targeted Advance, the business first has to be eligible for the EIDL Targeted Advance. It is also by invitation only via email from the SBA. In addition to needing to be located in a low income community, gross receipts must be down 50% in any 8-week period and only applies to businesses that have 10 or less employees.

You can find out more FAQ’s about these SBA programs HERE

Proposed $15,000 First Time Homebuyer Tax Credit

Proposed $15,000 First Time Homebuyer Tax Credit

The proposed $15,000 first time home buyer tax credit made available through the First Time Homebuyer Act is now officially a bill, heading to Congress.  

Under the current verbiage of the bill, this First Time Homebuyer Tax Credit will be available to taxpayers for the lower of 10% of the purchase price of the home, or $15,000.  The home purchased must be the taxpayer’s primary residence and must be occupied for 4 years.  If the home is sold within the 4 year period, a portion of the credit will need to be repaid.  

In addition, in order to be eligible for the $15,000 credit, the taxpayer needs to be a first time homebuyer, or have not owned a home in the last 3 years.  The home being purchased can not be more than 110% of the median purchase price in the area and the bill’s current version applies to homes purchased after December 31, 2020.

Under the current verbiage, this tax credit is mostly available to low to middle income earners with the qualification that their Modified Adjusted Gross Income cannot be more than 160% of the area median income (AMI).  To look up the area median income you can use https://ami-lookup-tool.fanniemae.com/amilookuptool/

In addition, a draft of The Downpayment For Equity Act of 2021 offers a $25,000 grant for first time homebuyers as well.  This grant includes requirements that the taxpayer is a first time homebuyer, first generation homebuyer, and other strict income requirements such as Modified Adjusted Gross Income cannot be more than 110% of the area median income (as opposed to 160% for the Credit).  

Stay tuned as we await whether President Biden will pass both bills offering qualified first time homebuyers the opportunity to alleviate some of the pressure of purchasing their first home. 

More Flexibility For Flexible Spending Accounts

More Flexibility For Flexible Spending Accounts

Due to the pandemic, the IRS has provided greater flexibility to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs.

Under the COVID-related Consolidated Appropriations Act (CAA) and the American Rescue Plan Act (ARPA), these FSA plans now have additional discretion in 2021 and 2022 to adjust their programs to help employees better meet the unanticipated consequences of the public health emergency.

In Notice 2021-15, the IRS responded to unanticipated changes in the availability of certain medical care and dependent care. They recognize that as a result of COVID-19, participating employees are more likely to have unused health FSA amounts or dependent care assistance program amounts at the end of 2020 and 2021.

Notice 2021-15 provides flexibility for employers in the following areas related to health FSAs and dependent care assistance programs:

  • Provides flexibility for the carryover of unused amounts from the 2020 and 2021 plan years
  • Provides flexibility to extend the permissible period for incurring claims for plan years ending in 2020 and 2021
  • Provides flexibility to adopt a special rule regarding post-termination reimbursements from health FSAs
  • Provides flexibility for a special claims period and carryover rule for dependent care assistance programs when a dependent “ages out” during the COVID-19 public health emergency
  • Allows certain mid-year election changes for health FSAs and dependent care assistance programs for plan years ending in 2021

Due to the fact that millions of employees have access to health FSAs and dependent care assistance programs sponsored by employers under cafeteria plans, these changes are important to address with the plan provider. The decision to adjust these employee benefit programs is at the discretion of the employer that sponsors the plan.

Normally the account funds that are not spent by the employee within the plan year, subject to limited grace periods or certain carryover amounts, are forfeited. However, Notice 2021-15 offers employers the option to amend their plans to provide greater flexibility for employees to elect and use these programs during the pandemic without risking the forfeiture of the amounts they have set aside.

Changes To The Employee Retention Credit

Changes To The Employee Retention Credit

Since the SBA just announced that the Paycheck Protection Program is done for now, it’s time to turn to other benefits for small business owners that are struggling to get back on their feet.

Thankfully the Employee Retention Credit (ERC) can be a real boon for small business owners and something worth revisiting in 2021.

Although the Employee Retention Credit was available in 2020, the Relief Act made changes to the ERC for the first two calendar quarters of 2021, including:

  • the increase in the maximum credit amount,
  • the expansion of the category of employers that may be eligible to claim the credit,
  • modifications to the gross receipts test,
  • revisions to the definition of qualified wages, and
  • new restrictions on the ability of eligible employers to request an advance payment of the credit.

Although the Employee Retention Credit has been available since the passing of the CARES Act in 2020, it didn’t get as much attention due to the Payroll Protection Program.  In 2020 if a business owner received any funds from PPP, they weren’t eligible for the ERC.

However, the above changes have since made the ERC much more beneficial for applicable small businesses to reconsider.

Even if the business did receive PPP funds, they may still be eligible to claim a portion of the Employee Retention Credit.

Among some of the changes for 2021, the Employee Retention Credit now applies to businesses with 500 or fewer employees (an increase from the 2020 threshold of 100 or fewer employees).

It is also easier to qualify in 2021 than it was in 2020, with businesses only needing to show a 20% decrease in gross receipts, as well as the option for a more favorable look-back to the prior quarters (a decrease from the 2020 threshold of 50% decrease in gross receipts).  This means far more businesses will qualify for the ERC in 2021 than in 2020.

The IRS has provided Form 7200 “Advance Payment Of Employer Credits Due To Covid-19”, allowing businesses to receive advance payments to help with cash flow issues.  

You can check out more information and details about the changes to the Employee Retention Credit for 2021 HERE 

SBA Restaurant Revitalization Fund

SBA Restaurant Revitalization Fund

As of May 3rd, the SBA launched their much-anticipated Restaurant Revitalization Fund to help struggling restaurants get the support they need in order to keep their doors open as America slowly reopens for business after the pandemic.

This $28.6 billion grant program was specifically designed to help restaurant businesses that have been significantly affected due to closures and crowd-size restrictions.

The SBA has conducted outreach throughout the country, and with over 660,000 restaurants in the United States, they understand that there is more need than there are resources.  Therefore, they recommend applying as soon as possible, as the program is on a first come, first serve basis.

 

Here are some links and information you will need:

  • Information about the Restaurant Revitalization Fund can be found at https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund
  • You can register and read the eligibility requirements at https://restaurants.sba.gov 
  • Some of the information needed will be the taxpayer identification number,;all information from lenders if PPP loan was previously taken including the loan amount, whether it was forgiven, how much is still owed, account numbers; addresses for anyone who owns 20% or greater of the business; list of affiliated businesses; detail of gross receipts and expenses; most recent tax returns; bank statements; financial statements; payroll information; loan information.
  • Additional documentation is required if the business is a brewpub, tasting room, taproom, brewery, winery, distillery, bakery, hotel, motel or inn.

 

This is an important step towards helping to revitalize the pandemic’s devastating impact on the restaurant industry and hopefully will help restaurants and related businesses get back on their feet.

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